Correlation Between Ares Management and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Ares Management and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Ares Management and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and SLR Investment.
Diversification Opportunities for Ares Management and SLR Investment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and SLR is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Ares Management i.e., Ares Management and SLR Investment go up and down completely randomly.
Pair Corralation between Ares Management and SLR Investment
Assuming the 90 days horizon Ares Management Corp is expected to generate 1.72 times more return on investment than SLR Investment. However, Ares Management is 1.72 times more volatile than SLR Investment Corp. It trades about 0.2 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.17 per unit of risk. If you would invest 12,972 in Ares Management Corp on August 28, 2024 and sell it today you would earn a total of 4,032 from holding Ares Management Corp or generate 31.08% 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. SLR Investment Corp
Performance |
| Timeline |
| Ares Management Corp |
| SLR Investment Corp |
Ares Management and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and SLR Investment
The main advantage of trading using opposite Ares Management and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Ares Management vs. MEDICAL FACILITIES NEW | Ares Management vs. Westinghouse Air Brake | Ares Management vs. Ryanair Holdings plc | Ares Management vs. Advanced Medical Solutions |
| SLR Investment vs. The Bank of | SLR Investment vs. Superior Plus Corp | SLR Investment vs. NMI Holdings | SLR Investment vs. Origin Agritech |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |