Correlation Between Ares Management and Arrowmark Financial
Can any of the company-specific risk be diversified away by investing in both Ares Management and Arrowmark Financial 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 Arrowmark Financial 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 Arrowmark Financial Corp, you can compare the effects of market volatilities on Ares Management and Arrowmark Financial 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 Arrowmark Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Arrowmark Financial.
Diversification Opportunities for Ares Management and Arrowmark Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Arrowmark is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Arrowmark Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowmark Financial Corp 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 Arrowmark Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowmark Financial Corp has no effect on the direction of Ares Management i.e., Ares Management and Arrowmark Financial go up and down completely randomly.
Pair Corralation between Ares Management and Arrowmark Financial
Given the investment horizon of 90 days Ares Management LP is expected to generate 1.79 times more return on investment than Arrowmark Financial. However, Ares Management is 1.79 times more volatile than Arrowmark Financial Corp. It trades about 0.12 of its potential returns per unit of risk. Arrowmark Financial Corp is currently generating about 0.14 per unit of risk. If you would invest 13,637 in Ares Management LP on August 30, 2024 and sell it today you would earn a total of 3,841 from holding Ares Management LP or generate 28.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. Arrowmark Financial Corp
Performance |
| Timeline |
| Ares Management LP |
| Arrowmark Financial Corp |
Ares Management and Arrowmark Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Arrowmark Financial
The main advantage of trading using opposite Ares Management and Arrowmark Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Arrowmark Financial 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 Arrowmark Financial will offset losses from the drop in Arrowmark Financial's long position.| Ares Management vs. ClimateRock Class A | Ares Management vs. CF Acquisition VII | Ares Management vs. DP Cap Acquisition |
| Arrowmark Financial vs. Brookfield Business Corp | Arrowmark Financial vs. Elysee Development Corp | Arrowmark Financial vs. DWS Municipal Income | Arrowmark Financial vs. Blackrock Munivest |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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