Correlation Between Ares Dynamic and Eagle Pointome

Can any of the company-specific risk be diversified away by investing in both Ares Dynamic and Eagle Pointome 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 Ares Dynamic and Eagle Pointome into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares Dynamic Credit and Eagle Pointome, you can compare the effects of market volatilities on Ares Dynamic and Eagle Pointome 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 Ares Dynamic with a short position of Eagle Pointome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Dynamic and Eagle Pointome.

Diversification Opportunities for Ares Dynamic and Eagle Pointome

0.3

Correlation Coefficient

Ares Dynamic  Eagle Pointome

Weak diversification

The 3 months correlation between Ares and Eagle is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ares Dynamic Credit and Eagle Pointome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pointome and Ares 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 Ares Dynamic Credit are associated (or correlated) with Eagle Pointome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pointome has no effect on the direction of Ares Dynamic i.e., Ares Dynamic and Eagle Pointome go up and down completely randomly.

Pair Corralation between Ares Dynamic and Eagle Pointome

Given the investment horizon of 90 days Ares Dynamic Credit is expected to under-perform the Eagle Pointome. But the fund apears to be less risky and, when comparing its historical volatility, Ares Dynamic Credit is 1.22 times less risky than Eagle Pointome. The fund trades about -0.07 of its potential returns per unit of risk. The Eagle Pointome is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,484  in Eagle Pointome on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Eagle Pointome or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ares Dynamic Credit  vs.  Eagle Pointome

Ares Dynamic Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Dynamic Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound fundamental indicators, Ares Dynamic is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Eagle Pointome

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Pointome has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Eagle Pointome is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ares Dynamic and Eagle Pointome

The main advantage of trading using opposite Ares Dynamic and Eagle Pointome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Dynamic position performs unexpectedly, Eagle Pointome 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 Eagle Pointome will offset losses from the drop in Eagle Pointome's long position.

The idea behind Ares Dynamic Credit and Eagle Pointome pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.