Correlation Between Ares Capital and Terawulf
Can any of the company-specific risk be diversified away by investing in both Ares Capital and Terawulf 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 Terawulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Capital and Terawulf, you can compare the effects of market volatilities on Ares Capital and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Capital and Terawulf.
Diversification Opportunities for Ares Capital and Terawulf
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and Terawulf is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ares Capital and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Ares Capital i.e., Ares Capital and Terawulf go up and down completely randomly.
Pair Corralation between Ares Capital and Terawulf
Given the investment horizon of 90 days Ares Capital is expected to generate 8.91 times less return on investment than Terawulf. But when comparing it to its historical volatility, Ares Capital is 8.58 times less risky than Terawulf. It trades about 0.09 of its potential returns per unit of risk. Terawulf is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Terawulf on November 1, 2024 and sell it today you would earn a total of 409.00 from holding Terawulf or generate 639.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ares Capital vs. Terawulf
Performance |
| Timeline |
| Ares Capital |
| Terawulf |
Ares Capital and Terawulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Capital and Terawulf
The main advantage of trading using opposite Ares Capital and Terawulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Capital position performs unexpectedly, Terawulf 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 Terawulf will offset losses from the drop in Terawulf'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 |
| Terawulf vs. Iris Energy | Terawulf vs. Stronghold Digital Mining | Terawulf vs. Argo Blockchain PLC | Terawulf vs. Bitfarms |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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