Correlation Between Ares Management and AdCapital
Can any of the company-specific risk be diversified away by investing in both Ares Management and AdCapital 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 AdCapital 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 AdCapital AG, you can compare the effects of market volatilities on Ares Management and AdCapital 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 AdCapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and AdCapital.
Diversification Opportunities for Ares Management and AdCapital
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ares and AdCapital is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and AdCapital AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdCapital AG 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 AdCapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdCapital AG has no effect on the direction of Ares Management i.e., Ares Management and AdCapital go up and down completely randomly.
Pair Corralation between Ares Management and AdCapital
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.4 times more return on investment than AdCapital. However, Ares Management is 1.4 times more volatile than AdCapital AG. It trades about 0.13 of its potential returns per unit of risk. AdCapital AG is currently generating about -0.14 per unit of risk. If you would invest 15,450 in Ares Management Corp on September 1, 2024 and sell it today you would earn a total of 1,184 from holding Ares Management Corp or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. AdCapital AG
Performance |
| Timeline |
| Ares Management Corp |
| AdCapital AG |
Ares Management and AdCapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and AdCapital
The main advantage of trading using opposite Ares Management and AdCapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, AdCapital 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 AdCapital will offset losses from the drop in AdCapital's long position.| Ares Management vs. MAGIC SOFTWARE ENTR | Ares Management vs. CAREER EDUCATION | Ares Management vs. ATOSS SOFTWARE | Ares Management vs. CPU SOFTWAREHOUSE |
| AdCapital vs. Ameriprise Financial | AdCapital vs. Ares Management Corp | AdCapital vs. Superior Plus Corp | AdCapital vs. NMI Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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