Correlation Between Ares Dynamic and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Ares Dynamic and Cornerstone Strategic 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 Dynamic and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Dynamic Credit and Cornerstone Strategic Value, you can compare the effects of market volatilities on Ares Dynamic and Cornerstone Strategic 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 Dynamic with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Dynamic and Cornerstone Strategic.
Diversification Opportunities for Ares Dynamic and Cornerstone Strategic
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and Cornerstone is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ares Dynamic Credit and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Ares Dynamic 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 Dynamic Credit are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Ares Dynamic i.e., Ares Dynamic and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Ares Dynamic and Cornerstone Strategic
Given the investment horizon of 90 days Ares Dynamic Credit is expected to generate 0.28 times more return on investment than Cornerstone Strategic. However, Ares Dynamic Credit is 3.61 times less risky than Cornerstone Strategic. It trades about 0.22 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about -0.09 per unit of risk. If you would invest 1,491 in Ares Dynamic Credit on September 12, 2024 and sell it today you would earn a total of 39.00 from holding Ares Dynamic Credit or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Dynamic Credit vs. Cornerstone Strategic Value
Performance |
| Timeline |
| Ares Dynamic Credit |
| Cornerstone Strategic |
Ares Dynamic and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Dynamic and Cornerstone Strategic
The main advantage of trading using opposite Ares Dynamic and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Dynamic position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| Ares Dynamic vs. Oxford Lane Capital | Ares Dynamic vs. Orchid Island Capital | Ares Dynamic vs. Guggenheim Strategic Opportunities | Ares Dynamic vs. Stone Harbor Emerging |
| Cornerstone Strategic vs. Oxford Lane Capital | Cornerstone Strategic vs. Orchid Island Capital | Cornerstone Strategic vs. Guggenheim Strategic Opportunities | Cornerstone Strategic vs. Stone Harbor Emerging |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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