Correlation Between Ares Management and Bank of New York Mellon
Can any of the company-specific risk be diversified away by investing in both Ares Management and Bank of New York Mellon 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 Bank of New York Mellon 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 The Bank of, you can compare the effects of market volatilities on Ares Management and Bank of New York Mellon 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 Bank of New York Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Bank of New York Mellon.
Diversification Opportunities for Ares Management and Bank of New York Mellon
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and Bank is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York Mellon 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 Bank of New York Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York Mellon has no effect on the direction of Ares Management i.e., Ares Management and Bank of New York Mellon go up and down completely randomly.
Pair Corralation between Ares Management and Bank of New York Mellon
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.35 times more return on investment than Bank of New York Mellon. However, Ares Management is 1.35 times more volatile than The Bank of. It trades about 0.12 of its potential returns per unit of risk. The Bank of is currently generating about 0.15 per unit of risk. If you would invest 8,528 in Ares Management Corp on August 28, 2024 and sell it today you would earn a total of 8,476 from holding Ares Management Corp or generate 99.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. The Bank of
Performance |
| Timeline |
| Ares Management Corp |
| Bank of New York Mellon |
Ares Management and Bank of New York Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Bank of New York Mellon
The main advantage of trading using opposite Ares Management and Bank of New York Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Bank of New York Mellon 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 Bank of New York Mellon will offset losses from the drop in Bank of New York Mellon's long position.| Ares Management vs. The Bank of | Ares Management vs. Superior Plus Corp | Ares Management vs. NMI Holdings | Ares Management vs. Origin Agritech |
| Bank of New York Mellon vs. Superior Plus Corp | Bank of New York Mellon vs. NMI Holdings | Bank of New York Mellon vs. Origin Agritech | Bank of New York Mellon vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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