Correlation Between Ares Management and Affiliated Managers
Can any of the company-specific risk be diversified away by investing in both Ares Management and Affiliated Managers 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 Affiliated Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares Management LP and Affiliated Managers Group, you can compare the effects of market volatilities on Ares Management and Affiliated Managers 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 Affiliated Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Affiliated Managers.
Diversification Opportunities for Ares Management and Affiliated Managers
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and Affiliated is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Affiliated Managers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affiliated Managers 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 LP are associated (or correlated) with Affiliated Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affiliated Managers has no effect on the direction of Ares Management i.e., Ares Management and Affiliated Managers go up and down completely randomly.
Pair Corralation between Ares Management and Affiliated Managers
Given the investment horizon of 90 days Ares Management LP is expected to generate 0.78 times more return on investment than Affiliated Managers. However, Ares Management LP is 1.29 times less risky than Affiliated Managers. It trades about 0.08 of its potential returns per unit of risk. Affiliated Managers Group is currently generating about -0.05 per unit of risk. If you would invest 17,098 in Ares Management LP on August 27, 2024 and sell it today you would earn a total of 505.00 from holding Ares Management LP or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. Affiliated Managers Group
Performance |
| Timeline |
| Ares Management LP |
| Affiliated Managers |
Ares Management and Affiliated Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Affiliated Managers
The main advantage of trading using opposite Ares Management and Affiliated Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Affiliated Managers 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 Affiliated Managers will offset losses from the drop in Affiliated Managers' long position.| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
| Affiliated Managers vs. Brightsphere Investment Group | Affiliated Managers vs. Franklin Templeton Limited | Affiliated Managers vs. Blackrock Muni Intermediate | Affiliated Managers vs. Munivest Fund |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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