Correlation Between Ares Capital and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Invesco Trust 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 Invesco Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Invesco Trust For, you can compare the effects of market volatilities on Ares Capital and Invesco Trust 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 Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Invesco Trust.
Diversification Opportunities for Ares Capital and Invesco Trust
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and Invesco is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of Ares Capital i.e., Ares Capital and Invesco Trust go up and down completely randomly.
Pair Corralation between Ares Capital and Invesco Trust
Given the investment horizon of 90 days Ares Capital is expected to generate 1.62 times more return on investment than Invesco Trust. However, Ares Capital is 1.62 times more volatile than Invesco Trust For. It trades about 0.13 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.17 per unit of risk. If you would invest 2,209 in Ares Capital on November 9, 2024 and sell it today you would earn a total of 64.00 from holding Ares Capital or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Capital vs. Invesco Trust For
Performance |
| Timeline |
| Ares Capital |
| Invesco Trust For |
Ares Capital and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Invesco Trust
The main advantage of trading using opposite Ares Capital and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Invesco Trust 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 Invesco Trust will offset losses from the drop in Invesco Trust'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 |
| Invesco Trust vs. Pimco New York | Invesco Trust vs. Pimco New York | Invesco Trust vs. BlackRock New York | Invesco Trust vs. Invesco California Value |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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