Correlation Between Ares Management and Mid America
Can any of the company-specific risk be diversified away by investing in both Ares Management and Mid America 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 Mid America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and Mid America Apartment Communities, you can compare the effects of market volatilities on Ares Management and Mid America 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 Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Mid America.
Diversification Opportunities for Ares Management and Mid America
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ares and Mid is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment 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 Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Ares Management i.e., Ares Management and Mid America go up and down completely randomly.
Pair Corralation between Ares Management and Mid America
Assuming the 90 days trading horizon Ares Management is expected to generate 0.98 times more return on investment than Mid America. However, Ares Management is 1.02 times less risky than Mid America. It trades about 0.12 of its potential returns per unit of risk. Mid America Apartment Communities is currently generating about 0.05 per unit of risk. If you would invest 4,026 in Ares Management on November 9, 2024 and sell it today you would earn a total of 6,908 from holding Ares Management or generate 171.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 45.92% |
| Values | Daily Returns |
Ares Management vs. Mid America Apartment Communit
Performance |
| Timeline |
| Ares Management |
| Mid America Apartment |
Ares Management and Mid America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Mid America
The main advantage of trading using opposite Ares Management and Mid America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Mid America 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 Mid America will offset losses from the drop in Mid America's long position.| Ares Management vs. Unity Software | Ares Management vs. Take Two Interactive Software | Ares Management vs. United States Steel | Ares Management vs. Clover Health Investments, |
| Mid America vs. Take Two Interactive Software | Mid America vs. Align Technology | Mid America vs. Datadog, | Mid America vs. CVS Health |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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