Correlation Between Ares Management and CHEMICAL INDUSTRIES
Can any of the company-specific risk be diversified away by investing in both Ares Management and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES, you can compare the effects of market volatilities on Ares Management and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CHEMICAL INDUSTRIES.
Diversification Opportunities for Ares Management and CHEMICAL INDUSTRIES
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ares and CHEMICAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CHEMICAL INDUSTRIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEMICAL INDUSTRIES has no effect on the direction of Ares Management i.e., Ares Management and CHEMICAL INDUSTRIES go up and down completely randomly.
Pair Corralation between Ares Management and CHEMICAL INDUSTRIES
Assuming the 90 days horizon Ares Management Corp is expected to generate 6.32 times more return on investment than CHEMICAL INDUSTRIES. However, Ares Management is 6.32 times more volatile than CHEMICAL INDUSTRIES. It trades about 0.11 of its potential returns per unit of risk. CHEMICAL INDUSTRIES is currently generating about 0.06 per unit of risk. If you would invest 10,385 in Ares Management Corp on October 17, 2024 and sell it today you would earn a total of 6,695 from holding Ares Management Corp or generate 64.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. CHEMICAL INDUSTRIES
Performance |
| Timeline |
| Ares Management Corp |
| CHEMICAL INDUSTRIES |
Ares Management and CHEMICAL INDUSTRIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and CHEMICAL INDUSTRIES
The main advantage of trading using opposite Ares Management and CHEMICAL INDUSTRIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES will offset losses from the drop in CHEMICAL INDUSTRIES's long position.| Ares Management vs. Hitachi Construction Machinery | Ares Management vs. North American Construction | Ares Management vs. URBAN OUTFITTERS | Ares Management vs. RYU Apparel |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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