Correlation Between Ares Capital and LatAmGrowth SPAC
Can any of the company-specific risk be diversified away by investing in both Ares Capital and LatAmGrowth SPAC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ares Capital and LatAmGrowth SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and LatAmGrowth SPAC, you can compare the effects of market volatilities on Ares Capital and LatAmGrowth SPAC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ares Capital with a short position of LatAmGrowth SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and LatAmGrowth SPAC.
Diversification Opportunities for Ares Capital and LatAmGrowth SPAC
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and LatAmGrowth is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC and Ares Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ares Capital are associated (or correlated) with LatAmGrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LatAmGrowth SPAC has no effect on the direction of Ares Capital i.e., Ares Capital and LatAmGrowth SPAC go up and down completely randomly.
Pair Corralation between Ares Capital and LatAmGrowth SPAC
Given the investment horizon of 90 days Ares Capital is expected to generate 8.52 times more return on investment than LatAmGrowth SPAC. However, Ares Capital is 8.52 times more volatile than LatAmGrowth SPAC. It trades about 0.07 of its potential returns per unit of risk. LatAmGrowth SPAC is currently generating about 0.2 per unit of risk. If you would invest 2,059 in Ares Capital on August 29, 2024 and sell it today you would earn a total of 142.00 from holding Ares Capital or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Capital vs. LatAmGrowth SPAC
Performance |
| Timeline |
| Ares Capital |
| LatAmGrowth SPAC |
Ares Capital and LatAmGrowth SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and LatAmGrowth SPAC
The main advantage of trading using opposite Ares Capital and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, LatAmGrowth SPAC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LatAmGrowth SPAC will offset losses from the drop in LatAmGrowth SPAC's long position.The idea behind Ares Capital and LatAmGrowth SPAC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LatAmGrowth SPAC vs. Portage Fintech Acquisition | LatAmGrowth SPAC vs. Swiftmerge Acquisition Corp | LatAmGrowth SPAC vs. Four Leaf Acquisition | LatAmGrowth SPAC vs. IX Acquisition Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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