Correlation Between Ares Management and CVS Health
Can any of the company-specific risk be diversified away by investing in both Ares Management and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and CVS Health, you can compare the effects of market volatilities on Ares Management and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CVS Health.
Diversification Opportunities for Ares Management and CVS Health
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and CVS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Ares Management i.e., Ares Management and CVS Health go up and down completely randomly.
Pair Corralation between Ares Management and CVS Health
Assuming the 90 days trading horizon Ares Management is expected to generate 4.32 times less return on investment than CVS Health. But when comparing it to its historical volatility, Ares Management is 1.26 times less risky than CVS Health. It trades about 0.13 of its potential returns per unit of risk. CVS Health is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 2,765 in CVS Health on November 5, 2024 and sell it today you would earn a total of 530.00 from holding CVS Health or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ares Management vs. CVS Health
Performance |
| Timeline |
| Ares Management |
| CVS Health |
Ares Management and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and CVS Health
The main advantage of trading using opposite Ares Management and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Ares Management vs. Taiwan Semiconductor Manufacturing | Ares Management vs. Apple Inc | Ares Management vs. Alibaba Group Holding | Ares Management vs. Microsoft |
| CVS Health vs. Unity Software | CVS Health vs. Credit Acceptance | CVS Health vs. Ameriprise Financial | CVS Health vs. Sumitomo Mitsui 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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