Correlation Between Ares Management and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Ares Management and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on Ares Management and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and DXC Technology.
Diversification Opportunities for Ares Management and DXC Technology
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ares and DXC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Ares Management i.e., Ares Management and DXC Technology go up and down completely randomly.
Pair Corralation between Ares Management and DXC Technology
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.69 times more return on investment than DXC Technology. However, Ares Management Corp is 1.46 times less risky than DXC Technology. It trades about 0.11 of its potential returns per unit of risk. DXC Technology Co is currently generating about -0.01 per unit of risk. If you would invest 7,286 in Ares Management Corp on November 1, 2024 and sell it today you would earn a total of 10,800 from holding Ares Management Corp or generate 148.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. DXC Technology Co
Performance |
| Timeline |
| Ares Management Corp |
| DXC Technology |
Ares Management and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and DXC Technology
The main advantage of trading using opposite Ares Management and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Ares Management vs. Air Transport Services | Ares Management vs. CSSC Offshore Marine | Ares Management vs. Nippon Light Metal | Ares Management vs. THORNEY TECHS LTD |
| DXC Technology vs. T MOBILE US | DXC Technology vs. Iridium Communications | DXC Technology vs. Ares Management Corp | DXC Technology vs. Brockhaus Capital Management |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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