Correlation Between Ares Management and CEVA
Can any of the company-specific risk be diversified away by investing in both Ares Management and CEVA 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 CEVA 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 CEVA Inc, you can compare the effects of market volatilities on Ares Management and CEVA 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 CEVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CEVA.
Diversification Opportunities for Ares Management and CEVA
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and CEVA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA 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 CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of Ares Management i.e., Ares Management and CEVA go up and down completely randomly.
Pair Corralation between Ares Management and CEVA
Assuming the 90 days horizon Ares Management Corp is expected to generate 0.6 times more return on investment than CEVA. However, Ares Management Corp is 1.68 times less risky than CEVA. It trades about 0.13 of its potential returns per unit of risk. CEVA Inc is currently generating about 0.03 per unit of risk. If you would invest 5,973 in Ares Management Corp on September 14, 2024 and sell it today you would earn a total of 11,525 from holding Ares Management Corp or generate 192.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ares Management Corp vs. CEVA Inc
Performance |
| Timeline |
| Ares Management Corp |
| CEVA Inc |
Ares Management and CEVA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and CEVA
The main advantage of trading using opposite Ares Management and CEVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CEVA 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 CEVA will offset losses from the drop in CEVA's 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 |
| CEVA vs. ALERION CLEANPOWER | CEVA vs. AM EAGLE OUTFITTERS | CEVA vs. SALESFORCE INC CDR | CEVA vs. RYU Apparel |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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