Correlation Between Ares Management and EBay
Can any of the company-specific risk be diversified away by investing in both Ares Management and EBay 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 EBay 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 eBay Inc, you can compare the effects of market volatilities on Ares Management and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and EBay.
Diversification Opportunities for Ares Management and EBay
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and EBay is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Ares Management i.e., Ares Management and EBay go up and down completely randomly.
Pair Corralation between Ares Management and EBay
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.22 times more return on investment than EBay. However, Ares Management is 1.22 times more volatile than eBay Inc. It trades about 0.12 of its potential returns per unit of risk. eBay Inc is currently generating about 0.14 per unit of risk. If you would invest 9,963 in Ares Management Corp on September 5, 2024 and sell it today you would earn a total of 6,861 from holding Ares Management Corp or generate 68.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.41% |
| Values | Daily Returns |
Ares Management Corp vs. eBay Inc
Performance |
| Timeline |
| Ares Management Corp |
| eBay Inc |
Ares Management and EBay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and EBay
The main advantage of trading using opposite Ares Management and EBay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, EBay 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 EBay will offset losses from the drop in EBay's long position.| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
| EBay vs. BURLINGTON STORES | EBay vs. Strategic Investments AS | EBay vs. Virtus Investment Partners | EBay vs. Burlington Stores |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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