Correlation Between Ares Management and Hedge Realty
Can any of the company-specific risk be diversified away by investing in both Ares Management and Hedge Realty 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 Hedge Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and Hedge Realty Development, you can compare the effects of market volatilities on Ares Management and Hedge Realty 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 Hedge Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Hedge Realty.
Diversification Opportunities for Ares Management and Hedge Realty
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Hedge is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Hedge Realty Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hedge Realty Development 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 Hedge Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hedge Realty Development has no effect on the direction of Ares Management i.e., Ares Management and Hedge Realty go up and down completely randomly.
Pair Corralation between Ares Management and Hedge Realty
Assuming the 90 days trading horizon Ares Management is expected to generate 0.59 times more return on investment than Hedge Realty. However, Ares Management is 1.7 times less risky than Hedge Realty. It trades about 0.21 of its potential returns per unit of risk. Hedge Realty Development is currently generating about -0.06 per unit of risk. If you would invest 10,208 in Ares Management on October 25, 2024 and sell it today you would earn a total of 1,343 from holding Ares Management or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Ares Management vs. Hedge Realty Development
Performance |
| Timeline |
| Ares Management |
| Hedge Realty Development |
Ares Management and Hedge Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Hedge Realty
The main advantage of trading using opposite Ares Management and Hedge Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Hedge Realty 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 Hedge Realty will offset losses from the drop in Hedge Realty's long position.| Ares Management vs. Martin Marietta Materials, | Ares Management vs. CM Hospitalar SA | Ares Management vs. Bemobi Mobile Tech | Ares Management vs. Charter Communications |
| Hedge Realty vs. Energisa SA | Hedge Realty vs. BTG Pactual Logstica | Hedge Realty vs. Plano Plano Desenvolvimento | Hedge Realty 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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