Correlation Between Inflection Point and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Inflection Point 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 Inflection Point and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflection Point Acquisition and Ares Capital, you can compare the effects of market volatilities on Inflection Point 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 Inflection Point with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and Ares Capital.
Diversification Opportunities for Inflection Point and Ares Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Inflection and Ares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Inflection Point 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 Inflection Point Acquisition 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 Inflection Point i.e., Inflection Point and Ares Capital go up and down completely randomly.
Pair Corralation between Inflection Point and Ares Capital
Assuming the 90 days horizon Inflection Point is expected to generate 4.2 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Inflection Point Acquisition is 3.34 times less risky than Ares Capital. It trades about 0.09 of its potential returns per unit of risk. Ares Capital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,887 in Ares Capital on August 27, 2024 and sell it today you would earn a total of 315.00 from holding Ares Capital or generate 16.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflection Point Acquisition vs. Ares Capital
Performance |
| Timeline |
| Inflection Point Acq |
| Ares Capital |
Inflection Point and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflection Point and Ares Capital
The main advantage of trading using opposite Inflection Point and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflection Point 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.| Inflection Point vs. PowerUp Acquisition Corp | Inflection Point vs. Aurora Innovation | Inflection Point vs. HUMANA INC | Inflection Point vs. Aquagold International |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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