Correlation Between Ares Management and Brookfield Business
Can any of the company-specific risk be diversified away by investing in both Ares Management and Brookfield Business 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 Business 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 Business Corp, you can compare the effects of market volatilities on Ares Management and Brookfield Business 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 Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Brookfield Business.
Diversification Opportunities for Ares Management and Brookfield Business
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ares and Brookfield is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business 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 Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Ares Management i.e., Ares Management and Brookfield Business go up and down completely randomly.
Pair Corralation between Ares Management and Brookfield Business
Given the investment horizon of 90 days Ares Management LP is expected to generate 0.74 times more return on investment than Brookfield Business. However, Ares Management LP is 1.35 times less risky than Brookfield Business. It trades about 0.12 of its potential returns per unit of risk. Brookfield Business Corp is currently generating about 0.04 per unit of risk. If you would invest 6,505 in Ares Management LP on August 30, 2024 and sell it today you would earn a total of 10,973 from holding Ares Management LP or generate 168.69% 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. Brookfield Business Corp
Performance |
| Timeline |
| Ares Management LP |
| Brookfield Business Corp |
Ares Management and Brookfield Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Brookfield Business
The main advantage of trading using opposite Ares Management and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Brookfield Business 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 Business will offset losses from the drop in Brookfield Business' long position.| Ares Management vs. TPG Inc | Ares Management vs. Carlyle Secured Lending | Ares Management vs. Brookfield Corp |
| Brookfield Business vs. Elysee Development Corp | Brookfield Business vs. DWS Municipal Income | Brookfield Business vs. Blackrock Munivest | Brookfield Business vs. Blackrock Muniholdings Closed |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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