Correlation Between Ares Management and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Ares Management and Parker Hannifin 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 Parker Hannifin 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 Parker Hannifin, you can compare the effects of market volatilities on Ares Management and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Parker Hannifin.
Diversification Opportunities for Ares Management and Parker Hannifin
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and Parker is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Ares Management i.e., Ares Management and Parker Hannifin go up and down completely randomly.
Pair Corralation between Ares Management and Parker Hannifin
Assuming the 90 days horizon Ares Management is expected to generate 1.26 times less return on investment than Parker Hannifin. But when comparing it to its historical volatility, Ares Management Corp is 1.08 times less risky than Parker Hannifin. It trades about 0.11 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 47,750 in Parker Hannifin on September 3, 2024 and sell it today you would earn a total of 19,190 from holding Parker Hannifin or generate 40.19% 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. Parker Hannifin
Performance |
| Timeline |
| Ares Management Corp |
| Parker Hannifin |
Ares Management and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Parker Hannifin
The main advantage of trading using opposite Ares Management and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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