Correlation Between Pimco Dynamic and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Pimco Dynamic 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 Pimco Dynamic and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Dynamic Income and Ares Capital, you can compare the effects of market volatilities on Pimco Dynamic 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 Pimco Dynamic with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Dynamic and Ares Capital.
Diversification Opportunities for Pimco Dynamic and Ares Capital
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pimco and Ares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Pimco 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 Pimco Dynamic Income 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 Pimco Dynamic i.e., Pimco Dynamic and Ares Capital go up and down completely randomly.
Pair Corralation between Pimco Dynamic and Ares Capital
Considering the 90-day investment horizon Pimco Dynamic is expected to generate 1.27 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Pimco Dynamic Income is 1.11 times less risky than Ares Capital. It trades about 0.07 of its potential returns per unit of risk. Ares Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,059 in Ares Capital on September 2, 2024 and sell it today you would earn a total of 156.00 from holding Ares Capital or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Dynamic Income vs. Ares Capital
Performance |
| Timeline |
| Pimco Dynamic Income |
| Ares Capital |
Pimco Dynamic and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Dynamic and Ares Capital
The main advantage of trading using opposite Pimco Dynamic and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Dynamic 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.| Pimco Dynamic vs. Pimco Corporate Income | Pimco Dynamic vs. Guggenheim Strategic Opportunities | Pimco Dynamic vs. Pimco Dynamic Income | Pimco Dynamic vs. Pimco High Income |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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