Correlation Between CN MODERN and Ares Management
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Ares Management 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 CN MODERN and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Ares Management Corp, you can compare the effects of market volatilities on CN MODERN and Ares Management 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 CN MODERN with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Ares Management.
Diversification Opportunities for CN MODERN and Ares Management
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 07M and Ares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of CN MODERN i.e., CN MODERN and Ares Management go up and down completely randomly.
Pair Corralation between CN MODERN and Ares Management
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.71 times less risky than Ares Management. The stock trades about -0.19 of its potential returns per unit of risk. The Ares Management Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 15,800 in Ares Management Corp on August 29, 2024 and sell it today you would earn a total of 1,054 from holding Ares Management Corp or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Ares Management Corp
Performance |
| Timeline |
| CN MODERN DAIRY |
| Ares Management Corp |
CN MODERN and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Ares Management
The main advantage of trading using opposite CN MODERN and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Ares Management 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 Management will offset losses from the drop in Ares Management's long position.| CN MODERN vs. Apple Inc | CN MODERN vs. Apple Inc | CN MODERN vs. Superior Plus Corp | CN MODERN vs. SIVERS SEMICONDUCTORS AB |
| Ares Management vs. BlackRock | Ares Management vs. Ameriprise Financial | Ares Management vs. Northern Trust |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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