Correlation Between Guggenheim Strategic and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic 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 Guggenheim Strategic and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Strategic Opportunities and Ares Capital, you can compare the effects of market volatilities on Guggenheim Strategic 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 Guggenheim Strategic with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Ares Capital.
Diversification Opportunities for Guggenheim Strategic and Ares Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guggenheim and Ares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Guggenheim Strategic 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 Guggenheim Strategic Opportunities 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 Guggenheim Strategic i.e., Guggenheim Strategic and Ares Capital go up and down completely randomly.
Pair Corralation between Guggenheim Strategic and Ares Capital
Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 1.43 times less return on investment than Ares Capital. In addition to that, Guggenheim Strategic is 1.61 times more volatile than Ares Capital. It trades about 0.05 of its total potential returns per unit of risk. Ares Capital is currently generating about 0.12 per unit of volatility. If you would invest 1,579 in Ares Capital on August 31, 2024 and sell it today you would earn a total of 622.00 from holding Ares Capital or generate 39.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim Strategic Opportuni vs. Ares Capital
Performance |
| Timeline |
| Guggenheim Strategic |
| Ares Capital |
Guggenheim Strategic and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim Strategic and Ares Capital
The main advantage of trading using opposite Guggenheim Strategic and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic 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.The idea behind Guggenheim Strategic Opportunities and Ares Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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