Correlation Between Ares Management and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Ares Management and CN MODERN 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 Management and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management Corp and CN MODERN DAIRY, you can compare the effects of market volatilities on Ares Management and CN MODERN 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 Management with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CN MODERN.
Diversification Opportunities for Ares Management and CN MODERN
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and 07M is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and Ares Management 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 Management Corp are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Ares Management i.e., Ares Management and CN MODERN go up and down completely randomly.
Pair Corralation between Ares Management and CN MODERN
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.71 times more return on investment than CN MODERN. However, Ares Management is 1.71 times more volatile than CN MODERN DAIRY. It trades about 0.11 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about -0.19 per unit of risk. 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 |
Ares Management Corp vs. CN MODERN DAIRY
Performance |
| Timeline |
| Ares Management Corp |
| CN MODERN DAIRY |
Ares Management and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and CN MODERN
The main advantage of trading using opposite Ares Management and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Ares Management vs. BlackRock | Ares Management vs. Ameriprise Financial | Ares Management vs. Northern Trust |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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