Correlation Between Ares Management and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both Ares Management and Consolidated Communications 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 Consolidated Communications 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 Consolidated Communications Holdings, you can compare the effects of market volatilities on Ares Management and Consolidated Communications 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 Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Consolidated Communications.
Diversification Opportunities for Ares Management and Consolidated Communications
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and Consolidated is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Ares Management i.e., Ares Management and Consolidated Communications go up and down completely randomly.
Pair Corralation between Ares Management and Consolidated Communications
Assuming the 90 days horizon Ares Management Corp is expected to generate 4.31 times more return on investment than Consolidated Communications. However, Ares Management is 4.31 times more volatile than Consolidated Communications Holdings. It trades about 0.28 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.26 per unit of risk. If you would invest 15,651 in Ares Management Corp on September 20, 2024 and sell it today you would earn a total of 1,693 from holding Ares Management Corp or generate 10.82% 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. Consolidated Communications Ho
Performance |
| Timeline |
| Ares Management Corp |
| Consolidated Communications |
Ares Management and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Consolidated Communications
The main advantage of trading using opposite Ares Management and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Consolidated Communications 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.| Ares Management vs. Ameriprise Financial | Ares Management vs. Superior Plus Corp | Ares Management vs. SIVERS SEMICONDUCTORS AB | Ares Management vs. CHINA HUARONG ENERHD 50 |
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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