Correlation Between Royalty Management and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Royalty Management 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 Royalty Management and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royalty Management Holding and Ares Capital, you can compare the effects of market volatilities on Royalty Management 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 Royalty Management with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and Ares Capital.
Diversification Opportunities for Royalty Management and Ares Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royalty and Ares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and Ares Capital go up and down completely randomly.
Pair Corralation between Royalty Management and Ares Capital
Given the investment horizon of 90 days Royalty Management Holding is expected to generate 5.74 times more return on investment than Ares Capital. However, Royalty Management is 5.74 times more volatile than Ares Capital. It trades about 0.16 of its potential returns per unit of risk. Ares Capital is currently generating about 0.09 per unit of risk. If you would invest 96.00 in Royalty Management Holding on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Royalty Management Holding or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royalty Management Holding vs. Ares Capital
Performance |
| Timeline |
| Royalty Management |
| Ares Capital |
Royalty Management and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royalty Management and Ares Capital
The main advantage of trading using opposite Royalty Management and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management 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.| Royalty Management vs. DWS Municipal Income | Royalty Management vs. Blackrock Munivest | Royalty Management vs. SEI Investments | Royalty Management vs. SCOR PK |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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