Correlation Between Ares Dynamic and EXD

Can any of the company-specific risk be diversified away by investing in both Ares Dynamic and EXD 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 EXD 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 EXD, you can compare the effects of market volatilities on Ares Dynamic and EXD 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 EXD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Dynamic and EXD.

Diversification Opportunities for Ares Dynamic and EXD

0.0

Correlation Coefficient

Ares Dynamic  EXD

Pay attention - limited upside

The 3 months correlation between Ares and EXD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ares Dynamic Credit and EXD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXD 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 EXD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXD has no effect on the direction of Ares Dynamic i.e., Ares Dynamic and EXD go up and down completely randomly.

Pair Corralation between Ares Dynamic and EXD

If you would invest (100.00) in EXD on December 26, 2024 and sell it today you would earn a total of  100.00  from holding EXD or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ares Dynamic Credit  vs.  EXD

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.

EXD

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ares Dynamic and EXD

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

The idea behind Ares Dynamic Credit and EXD 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.