Correlation Between Ares Capital and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Sixth Street 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 Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Sixth Street Specialty, you can compare the effects of market volatilities on Ares Capital and Sixth Street 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 Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Sixth Street.
Diversification Opportunities for Ares Capital and Sixth Street
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Sixth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty 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 Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Ares Capital i.e., Ares Capital and Sixth Street go up and down completely randomly.
Pair Corralation between Ares Capital and Sixth Street
Given the investment horizon of 90 days Ares Capital is expected to generate 1.05 times less return on investment than Sixth Street. But when comparing it to its historical volatility, Ares Capital is 1.07 times less risky than Sixth Street. It trades about 0.07 of its potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,465 in Sixth Street Specialty on August 24, 2024 and sell it today you would earn a total of 591.00 from holding Sixth Street Specialty or generate 40.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Capital vs. Sixth Street Specialty
Performance |
| Timeline |
| Ares Capital |
| Sixth Street Specialty |
Ares Capital and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Sixth Street
The main advantage of trading using opposite Ares Capital and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.| Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
| Sixth Street vs. New Mountain Finance | Sixth Street vs. Carlyle Secured Lending | Sixth Street vs. BlackRock TCP Capital | Sixth Street vs. Fidus Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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