Correlation Between Ares Management and GP Investments
Can any of the company-specific risk be diversified away by investing in both Ares Management and GP Investments 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 GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and GP Investments, you can compare the effects of market volatilities on Ares Management and GP Investments 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 GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and GP Investments.
Diversification Opportunities for Ares Management and GP Investments
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and GPIV33 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments 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 GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Ares Management i.e., Ares Management and GP Investments go up and down completely randomly.
Pair Corralation between Ares Management and GP Investments
Assuming the 90 days trading horizon Ares Management is expected to generate 0.54 times more return on investment than GP Investments. However, Ares Management is 1.84 times less risky than GP Investments. It trades about -0.02 of its potential returns per unit of risk. GP Investments is currently generating about -0.03 per unit of risk. If you would invest 10,985 in Ares Management on October 13, 2024 and sell it today you would lose (93.00) from holding Ares Management or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Ares Management vs. GP Investments
Performance |
| Timeline |
| Ares Management |
| GP Investments |
Ares Management and GP Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and GP Investments
The main advantage of trading using opposite Ares Management and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.| Ares Management vs. Taiwan Semiconductor Manufacturing | Ares Management vs. Apple Inc | Ares Management vs. Alibaba Group Holding | Ares Management vs. Banco Santander Chile |
| GP Investments vs. United States Steel | GP Investments vs. Martin Marietta Materials, | GP Investments vs. Marfrig Global Foods | GP Investments vs. Ares Management |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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