Correlation Between Guggenheim Strategic and Ares Capital

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Can any of the company-specific risk be diversified away by investing in both Guggenheim Strategic 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 Guggenheim Strategic and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim Strategic Opportunities and Ares Capital, you can compare the effects of market volatilities on Guggenheim Strategic 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 Guggenheim Strategic with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim Strategic and Ares Capital.

Diversification Opportunities for Guggenheim Strategic and Ares Capital

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Guggenheim and Ares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Strategic Opportuni and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Guggenheim Strategic 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 Guggenheim Strategic Opportunities 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 Guggenheim Strategic i.e., Guggenheim Strategic and Ares Capital go up and down completely randomly.

Pair Corralation between Guggenheim Strategic and Ares Capital

Considering the 90-day investment horizon Guggenheim Strategic is expected to generate 2.73 times less return on investment than Ares Capital. But when comparing it to its historical volatility, Guggenheim Strategic Opportunities is 1.16 times less risky than Ares Capital. It trades about 0.16 of its potential returns per unit of risk. Ares Capital is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  2,153  in Ares Capital on September 9, 2024 and sell it today you would earn a total of  68.00  from holding Ares Capital or generate 3.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Guggenheim Strategic Opportuni  vs.  Ares Capital

 Performance 
       Timeline  
Guggenheim Strategic 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Strategic Opportunities are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Guggenheim Strategic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Ares Capital 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ares Capital are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ares Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Guggenheim Strategic and Ares Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim Strategic and Ares Capital

The main advantage of trading using opposite Guggenheim Strategic and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim Strategic 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.
The idea behind Guggenheim Strategic Opportunities and Ares Capital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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