Correlation Between Ares Management and Snowflake
Can any of the company-specific risk be diversified away by investing in both Ares Management and Snowflake 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 Snowflake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management and Snowflake, you can compare the effects of market volatilities on Ares Management and Snowflake 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 Snowflake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Snowflake.
Diversification Opportunities for Ares Management and Snowflake
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and Snowflake is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Ares Management i.e., Ares Management and Snowflake go up and down completely randomly.
Pair Corralation between Ares Management and Snowflake
Assuming the 90 days trading horizon Ares Management is expected to generate 0.55 times more return on investment than Snowflake. However, Ares Management is 1.8 times less risky than Snowflake. It trades about 0.09 of its potential returns per unit of risk. Snowflake is currently generating about 0.03 per unit of risk. If you would invest 4,051 in Ares Management on December 11, 2024 and sell it today you would earn a total of 4,179 from holding Ares Management or generate 103.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ares Management vs. Snowflake
Performance |
| Timeline |
| Ares Management |
| Snowflake |
Ares Management and Snowflake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Snowflake
The main advantage of trading using opposite Ares Management and Snowflake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Snowflake 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 Snowflake will offset losses from the drop in Snowflake's long position.| Ares Management vs. Check Point Software | ||
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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