Correlation Between Ares Management and EQT AB
Can any of the company-specific risk be diversified away by investing in both Ares Management and EQT AB 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 EQT AB 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 EQT AB, you can compare the effects of market volatilities on Ares Management and EQT AB 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 EQT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and EQT AB.
Diversification Opportunities for Ares Management and EQT AB
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and EQT is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and EQT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT AB 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 EQT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT AB has no effect on the direction of Ares Management i.e., Ares Management and EQT AB go up and down completely randomly.
Pair Corralation between Ares Management and EQT AB
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.42 times more return on investment than EQT AB. However, Ares Management is 1.42 times more volatile than EQT AB. It trades about 0.13 of its potential returns per unit of risk. EQT AB is currently generating about -0.14 per unit of risk. If you would invest 15,800 in Ares Management Corp on August 27, 2024 and sell it today you would earn a total of 1,204 from holding Ares Management Corp or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. EQT AB
Performance |
| Timeline |
| Ares Management Corp |
| EQT AB |
Ares Management and EQT AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and EQT AB
The main advantage of trading using opposite Ares Management and EQT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, EQT AB 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 EQT AB will offset losses from the drop in EQT AB's long position.| Ares Management vs. MEDICAL FACILITIES NEW | Ares Management vs. Westinghouse Air Brake | Ares Management vs. Ryanair Holdings plc | Ares Management vs. Advanced Medical Solutions |
| EQT AB vs. The Bank of | EQT AB vs. Superior Plus Corp | EQT AB vs. NMI Holdings | EQT AB vs. Origin Agritech |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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