Correlation Between Ares Management and Expedia
Can any of the company-specific risk be diversified away by investing in both Ares Management and Expedia 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 Expedia 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 Expedia Group, you can compare the effects of market volatilities on Ares Management and Expedia 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 Expedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Expedia.
Diversification Opportunities for Ares Management and Expedia
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and Expedia is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Expedia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expedia Group 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 Expedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expedia Group has no effect on the direction of Ares Management i.e., Ares Management and Expedia go up and down completely randomly.
Pair Corralation between Ares Management and Expedia
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.7 times more return on investment than Expedia. However, Ares Management Corp is 1.42 times less risky than Expedia. It trades about 0.12 of its potential returns per unit of risk. Expedia Group is currently generating about 0.07 per unit of risk. If you would invest 8,052 in Ares Management Corp on August 31, 2024 and sell it today you would earn a total of 8,582 from holding Ares Management Corp or generate 106.58% 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. Expedia Group
Performance |
| Timeline |
| Ares Management Corp |
| Expedia Group |
Ares Management and Expedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Expedia
The main advantage of trading using opposite Ares Management and Expedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Expedia 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 Expedia will offset losses from the drop in Expedia's long position.| Ares Management vs. Ameriprise Financial | Ares Management vs. Superior Plus Corp | Ares Management vs. NMI Holdings | Ares Management vs. Origin Agritech |
| Expedia vs. Ming Le Sports | Expedia vs. Sporttotal AG | Expedia vs. Ares Management Corp | Expedia vs. Jupiter Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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