Correlation Between MFS Investment and Ares Capital
Can any of the company-specific risk be diversified away by investing in both MFS Investment and Ares Capital 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 MFS Investment and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Investment Grade and Ares Capital, you can compare the effects of market volatilities on MFS Investment and Ares Capital 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 MFS Investment with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and Ares Capital.
Diversification Opportunities for MFS Investment and Ares Capital
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Ares is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and MFS Investment 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 MFS Investment Grade are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of MFS Investment i.e., MFS Investment and Ares Capital go up and down completely randomly.
Pair Corralation between MFS Investment and Ares Capital
Considering the 90-day investment horizon MFS Investment Grade is expected to under-perform the Ares Capital. But the stock apears to be less risky and, when comparing its historical volatility, MFS Investment Grade is 1.46 times less risky than Ares Capital. The stock trades about -0.02 of its potential returns per unit of risk. The Ares Capital is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 2,218 in Ares Capital on November 4, 2024 and sell it today you would earn a total of 149.00 from holding Ares Capital or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
MFS Investment Grade vs. Ares Capital
Performance |
| Timeline |
| MFS Investment Grade |
| Ares Capital |
MFS Investment and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and Ares Capital
The main advantage of trading using opposite MFS Investment and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, Ares Capital 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 Ares Capital will offset losses from the drop in Ares Capital's long position.| MFS Investment vs. Hudson Acquisition I | MFS Investment vs. Marblegate Acquisition Corp | MFS Investment vs. Alpha One | MFS Investment vs. Manaris Corp |
| Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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