Correlation Between Westwood Holdings and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Westwood Holdings 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 Westwood Holdings and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Holdings Group and Ares Capital, you can compare the effects of market volatilities on Westwood Holdings 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 Westwood Holdings with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Holdings and Ares Capital.
Diversification Opportunities for Westwood Holdings and Ares Capital
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westwood and Ares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Holdings Group and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Westwood Holdings 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 Westwood Holdings Group 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 Westwood Holdings i.e., Westwood Holdings and Ares Capital go up and down completely randomly.
Pair Corralation between Westwood Holdings and Ares Capital
Considering the 90-day investment horizon Westwood Holdings Group is expected to generate 3.65 times more return on investment than Ares Capital. However, Westwood Holdings is 3.65 times more volatile than Ares Capital. It trades about 0.1 of its potential returns per unit of risk. Ares Capital is currently generating about 0.22 per unit of risk. If you would invest 1,549 in Westwood Holdings Group on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Westwood Holdings Group or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westwood Holdings Group vs. Ares Capital
Performance |
| Timeline |
| Westwood Holdings |
| Ares Capital |
Westwood Holdings and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Holdings and Ares Capital
The main advantage of trading using opposite Westwood Holdings and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Holdings 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.| Westwood Holdings vs. Ares Capital | Westwood Holdings vs. Hercules Capital | Westwood Holdings vs. Main Street Capital |
| 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 Managers module to screen money managers from public funds and ETFs managed around the world.
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