Correlation Between VITEC SOFTWARE and Ares Management
Can any of the company-specific risk be diversified away by investing in both VITEC SOFTWARE 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 VITEC SOFTWARE and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VITEC SOFTWARE GROUP and Ares Management Corp, you can compare the effects of market volatilities on VITEC SOFTWARE 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 VITEC SOFTWARE with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITEC SOFTWARE and Ares Management.
Diversification Opportunities for VITEC SOFTWARE and Ares Management
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VITEC and Ares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP 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 VITEC SOFTWARE 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 VITEC SOFTWARE GROUP 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 VITEC SOFTWARE i.e., VITEC SOFTWARE and Ares Management go up and down completely randomly.
Pair Corralation between VITEC SOFTWARE and Ares Management
Assuming the 90 days horizon VITEC SOFTWARE GROUP is expected to generate 1.45 times more return on investment than Ares Management. However, VITEC SOFTWARE is 1.45 times more volatile than Ares Management Corp. It trades about 0.21 of its potential returns per unit of risk. Ares Management Corp is currently generating about -0.08 per unit of risk. If you would invest 4,385 in VITEC SOFTWARE GROUP on October 12, 2024 and sell it today you would earn a total of 485.00 from holding VITEC SOFTWARE GROUP or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VITEC SOFTWARE GROUP vs. Ares Management Corp
Performance |
| Timeline |
| VITEC SOFTWARE GROUP |
| Ares Management Corp |
VITEC SOFTWARE and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VITEC SOFTWARE and Ares Management
The main advantage of trading using opposite VITEC SOFTWARE and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITEC SOFTWARE 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.| VITEC SOFTWARE vs. PARKEN Sport Entertainment | VITEC SOFTWARE vs. Tencent Music Entertainment | VITEC SOFTWARE vs. Nexstar Media Group | VITEC SOFTWARE vs. Ubisoft Entertainment SA |
| Ares Management vs. PLAYMATES TOYS | Ares Management vs. Penn National Gaming | Ares Management vs. GigaMedia | Ares Management vs. China Eastern Airlines |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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