Correlation Between Ares Management and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Ares Management and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on Ares Management and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Kaiser Aluminum.
Diversification Opportunities for Ares Management and Kaiser Aluminum
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and Kaiser is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Ares Management i.e., Ares Management and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Ares Management and Kaiser Aluminum
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.16 times more return on investment than Kaiser Aluminum. However, Ares Management is 1.16 times more volatile than Kaiser Aluminum. It trades about 0.26 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.06 per unit of risk. If you would invest 16,830 in Ares Management Corp on November 8, 2024 and sell it today you would earn a total of 1,744 from holding Ares Management Corp or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. Kaiser Aluminum
Performance |
| Timeline |
| Ares Management Corp |
| Kaiser Aluminum |
Ares Management and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Kaiser Aluminum
The main advantage of trading using opposite Ares Management and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Ares Management vs. MCEWEN MINING INC | Ares Management vs. Geely Automobile Holdings | Ares Management vs. Playtech plc | Ares Management vs. Calibre Mining Corp |
| Kaiser Aluminum vs. Infrastrutture Wireless Italiane | Kaiser Aluminum vs. Inspire Medical Systems | Kaiser Aluminum vs. CREO MEDICAL GRP | Kaiser Aluminum vs. ONWARD MEDICAL BV |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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