Correlation Between GFL ENVIRONM and Ares Management
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and Ares Management 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 GFL ENVIRONM and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and Ares Management Corp, you can compare the effects of market volatilities on GFL ENVIRONM and Ares Management 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 GFL ENVIRONM with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and Ares Management.
Diversification Opportunities for GFL ENVIRONM and Ares Management
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFL and Ares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and Ares Management go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and Ares Management
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.04 times more return on investment than Ares Management. However, GFL ENVIRONM is 1.04 times more volatile than Ares Management Corp. It trades about 0.12 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.12 per unit of risk. If you would invest 2,636 in GFL ENVIRONM on September 4, 2024 and sell it today you would earn a total of 1,884 from holding GFL ENVIRONM or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
GFL ENVIRONM vs. Ares Management Corp
Performance |
| Timeline |
| GFL ENVIRONM |
| Ares Management Corp |
GFL ENVIRONM and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and Ares Management
The main advantage of trading using opposite GFL ENVIRONM and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| GFL ENVIRONM vs. Waste Management | GFL ENVIRONM vs. Republic Services | GFL ENVIRONM vs. Waste Connections | GFL ENVIRONM vs. Veolia Environnement SA |
| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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