Correlation Between Tortoise Capital and Ares Dynamic

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

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

Diversification Opportunities for Tortoise Capital and Ares Dynamic

0.45

Correlation Coefficient

Tortoise Capital  Ares Dynamic

Very weak diversification

The 3 months correlation between Tortoise and Ares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Capital Series and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit and Tortoise Capital 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 Tortoise Capital Series are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of Tortoise Capital i.e., Tortoise Capital and Ares Dynamic go up and down completely randomly.

Pair Corralation between Tortoise Capital and Ares Dynamic

Considering the 90-day investment horizon Tortoise Capital Series is expected to generate 1.66 times more return on investment than Ares Dynamic. However, Tortoise Capital is 1.66 times more volatile than Ares Dynamic Credit. It trades about 0.05 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about -0.09 per unit of risk. If you would invest  1,992  in Tortoise Capital Series on December 28, 2024 and sell it today you would earn a total of  73.00  from holding Tortoise Capital Series or generate 3.66% return on investment over 90 days.

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

Tortoise Capital Series  vs.  Ares Dynamic Credit

Tortoise Capital Series

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Capital Series are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tortoise Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Tortoise Capital and Ares Dynamic

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

The idea behind Tortoise Capital Series and Ares Dynamic Credit 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.