Correlation Between Affiliated Managers and Ares Capital
Can any of the company-specific risk be diversified away by investing in both Affiliated Managers and Ares Capital 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 Affiliated Managers and Ares Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affiliated Managers Group and Ares Capital, you can compare the effects of market volatilities on Affiliated Managers and Ares Capital 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 Affiliated Managers with a short position of Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affiliated Managers and Ares Capital.
Diversification Opportunities for Affiliated Managers and Ares Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Affiliated and Ares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Affiliated Managers Group and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital and Affiliated Managers 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 Affiliated Managers Group are associated (or correlated) with Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Affiliated Managers i.e., Affiliated Managers and Ares Capital go up and down completely randomly.
Pair Corralation between Affiliated Managers and Ares Capital
Considering the 90-day investment horizon Affiliated Managers is expected to generate 1.98 times less return on investment than Ares Capital. In addition to that, Affiliated Managers is 1.66 times more volatile than Ares Capital. It trades about 0.02 of its total potential returns per unit of risk. Ares Capital is currently generating about 0.06 per unit of volatility. If you would invest 1,531 in Ares Capital on January 17, 2025 and sell it today you would earn a total of 478.00 from holding Ares Capital or generate 31.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affiliated Managers Group vs. Ares Capital
Performance |
| Timeline |
| Affiliated Managers |
| Ares Capital |
Affiliated Managers and Ares Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affiliated Managers and Ares Capital
The main advantage of trading using opposite Affiliated Managers and Ares Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affiliated Managers position performs unexpectedly, Ares Capital 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 Ares Capital will offset losses from the drop in Ares Capital's long position.| Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Munivest Fund | Affiliated Managers vs. Blackrock Floating Rate | Affiliated Managers vs. Brookfield Business Corp |
| Ares Capital vs. Triplepoint Venture Growth | Ares Capital vs. Sixth Street Specialty | Ares Capital vs. Main Street Capital | Ares Capital vs. Capital Southwest |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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