Correlation Between XAI Octagon and Ares Capital
Can any of the company-specific risk be diversified away by investing in both XAI Octagon 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 XAI Octagon and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XAI Octagon Floating and Ares Capital, you can compare the effects of market volatilities on XAI Octagon 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 XAI Octagon with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of XAI Octagon and Ares Capital.
Diversification Opportunities for XAI Octagon and Ares Capital
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XAI and Ares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding XAI Octagon Floating and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and XAI Octagon 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 XAI Octagon Floating 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 XAI Octagon i.e., XAI Octagon and Ares Capital go up and down completely randomly.
Pair Corralation between XAI Octagon and Ares Capital
Given the investment horizon of 90 days XAI Octagon Floating is expected to generate 0.5 times more return on investment than Ares Capital. However, XAI Octagon Floating is 2.0 times less risky than Ares Capital. It trades about 0.31 of its potential returns per unit of risk. Ares Capital is currently generating about 0.11 per unit of risk. If you would invest 680.00 in XAI Octagon Floating on August 27, 2024 and sell it today you would earn a total of 16.00 from holding XAI Octagon Floating or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XAI Octagon Floating vs. Ares Capital
Performance |
| Timeline |
| XAI Octagon Floating |
| Ares Capital |
XAI Octagon and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XAI Octagon and Ares Capital
The main advantage of trading using opposite XAI Octagon and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAI Octagon 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.| XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Capital Southwest | XAI Octagon vs. Cornerstone Strategic Return | XAI Octagon vs. Cornerstone Strategic Value |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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