Correlation Between XAI Octagon and Ares Dynamic

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

Diversification Opportunities for XAI Octagon and Ares Dynamic

0.45

Correlation Coefficient

XAI Octagon  Ares Dynamic

Very weak diversification

The 3 months correlation between XAI and Ares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding XAI Octagon Floating 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 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 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 XAI Octagon i.e., XAI Octagon and Ares Dynamic go up and down completely randomly.

Pair Corralation between XAI Octagon and Ares Dynamic

Given the investment horizon of 90 days XAI Octagon Floating is expected to generate 0.65 times more return on investment than Ares Dynamic. However, XAI Octagon Floating is 1.54 times less risky than Ares Dynamic. It trades about 0.32 of its potential returns per unit of risk. Ares Dynamic Credit is currently generating about 0.11 per unit of risk. If you would invest  666.00  in XAI Octagon Floating on September 4, 2024 and sell it today you would earn a total of  49.00  from holding XAI Octagon Floating or generate 7.36% return on investment over 90 days.

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

XAI Octagon Floating  vs.  Ares Dynamic Credit

XAI Octagon Floating

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, XAI Octagon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ares Dynamic Credit

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Dynamic Credit are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. 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 XAI Octagon and Ares Dynamic

The main advantage of trading using opposite XAI Octagon and Ares Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAI Octagon 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 XAI Octagon Floating 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 Stocks Directory module to find actively traded stocks across global markets.