Correlation Between Ares Management and RCM TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Ares Management and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES, you can compare the effects of market volatilities on Ares Management and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and RCM TECHNOLOGIES.
Diversification Opportunities for Ares Management and RCM TECHNOLOGIES
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and RCM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and RCM TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM TECHNOLOGIES has no effect on the direction of Ares Management i.e., Ares Management and RCM TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Ares Management and RCM TECHNOLOGIES
Assuming the 90 days horizon Ares Management is expected to generate 1.31 times less return on investment than RCM TECHNOLOGIES. But when comparing it to its historical volatility, Ares Management Corp is 1.13 times less risky than RCM TECHNOLOGIES. It trades about 0.14 of its potential returns per unit of risk. RCM TECHNOLOGIES is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,710 in RCM TECHNOLOGIES on October 18, 2024 and sell it today you would earn a total of 450.00 from holding RCM TECHNOLOGIES or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 79.01% |
| Values | Daily Returns |
Ares Management Corp vs. RCM TECHNOLOGIES
Performance |
| Timeline |
| Ares Management Corp |
| RCM TECHNOLOGIES |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Ares Management and RCM TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and RCM TECHNOLOGIES
The main advantage of trading using opposite Ares Management and RCM TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, RCM TECHNOLOGIES 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 RCM TECHNOLOGIES will offset losses from the drop in RCM TECHNOLOGIES's long position.| Ares Management vs. VIVA WINE GROUP | Ares Management vs. ITALIAN WINE BRANDS | Ares Management vs. Cal Maine Foods | Ares Management vs. Astral Foods Limited |
| RCM TECHNOLOGIES vs. Ares Management Corp | RCM TECHNOLOGIES vs. Harmony Gold Mining | RCM TECHNOLOGIES vs. Brockhaus Capital Management | RCM TECHNOLOGIES vs. Waste 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |