Correlation Between Ares Management and Carsales
Can any of the company-specific risk be diversified away by investing in both Ares Management and Carsales 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 Carsales 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 CarsalesCom, you can compare the effects of market volatilities on Ares Management and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Carsales.
Diversification Opportunities for Ares Management and Carsales
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Carsales is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Ares Management i.e., Ares Management and Carsales go up and down completely randomly.
Pair Corralation between Ares Management and Carsales
Assuming the 90 days horizon Ares Management is expected to generate 1.26 times less return on investment than Carsales. In addition to that, Ares Management is 2.2 times more volatile than CarsalesCom. It trades about 0.13 of its total potential returns per unit of risk. CarsalesCom is currently generating about 0.35 per unit of volatility. If you would invest 2,240 in CarsalesCom on August 29, 2024 and sell it today you would earn a total of 240.00 from holding CarsalesCom or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management Corp vs. CarsalesCom
Performance |
| Timeline |
| Ares Management Corp |
| CarsalesCom |
Ares Management and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Carsales
The main advantage of trading using opposite Ares Management and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Ares Management vs. Superior Plus Corp | Ares Management vs. NMI Holdings | Ares Management vs. Origin Agritech | Ares Management vs. SIVERS SEMICONDUCTORS AB |
| Carsales vs. CapitaLand Investment Limited | Carsales vs. Genco Shipping Trading | Carsales vs. MGIC INVESTMENT | Carsales vs. WisdomTree Investments |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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