Correlation Between Ares Management and Brookfield Asset
Can any of the company-specific risk be diversified away by investing in both Ares Management and Brookfield Asset 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 Brookfield Asset 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 Brookfield Asset Management, you can compare the effects of market volatilities on Ares Management and Brookfield Asset 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 Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Brookfield Asset.
Diversification Opportunities for Ares Management and Brookfield Asset
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and Brookfield is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man 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 Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Ares Management i.e., Ares Management and Brookfield Asset go up and down completely randomly.
Pair Corralation between Ares Management and Brookfield Asset
Given the investment horizon of 90 days Ares Management LP is expected to generate 0.96 times more return on investment than Brookfield Asset. However, Ares Management LP is 1.04 times less risky than Brookfield Asset. It trades about 0.2 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.13 per unit of risk. If you would invest 16,105 in Ares Management LP on November 1, 2024 and sell it today you would earn a total of 3,703 from holding Ares Management LP or generate 22.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. Brookfield Asset Management
Performance |
| Timeline |
| Ares Management LP |
| Brookfield Asset Man |
Ares Management and Brookfield Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Brookfield Asset
The main advantage of trading using opposite Ares Management and Brookfield Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Brookfield Asset 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 Brookfield Asset will offset losses from the drop in Brookfield Asset's long position.| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
| Brookfield Asset vs. Blue Owl Capital | Brookfield Asset vs. TPG Inc | Brookfield Asset vs. Patria Investments | Brookfield Asset vs. Cion Investment Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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