Correlation Between Ares Management and Franklin Resources
Can any of the company-specific risk be diversified away by investing in both Ares Management and Franklin Resources 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 Franklin Resources 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 Franklin Resources, you can compare the effects of market volatilities on Ares Management and Franklin Resources 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 Franklin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Franklin Resources.
Diversification Opportunities for Ares Management and Franklin Resources
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Franklin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources 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 Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Ares Management i.e., Ares Management and Franklin Resources go up and down completely randomly.
Pair Corralation between Ares Management and Franklin Resources
Given the investment horizon of 90 days Ares Management is expected to generate 1.67 times less return on investment than Franklin Resources. In addition to that, Ares Management is 1.22 times more volatile than Franklin Resources. It trades about 0.11 of its total potential returns per unit of risk. Franklin Resources is currently generating about 0.23 per unit of volatility. If you would invest 2,009 in Franklin Resources on August 24, 2024 and sell it today you would earn a total of 163.00 from holding Franklin Resources or generate 8.11% 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. Franklin Resources
Performance |
| Timeline |
| Ares Management LP |
| Franklin Resources |
Ares Management and Franklin Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Franklin Resources
The main advantage of trading using opposite Ares Management and Franklin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Franklin Resources 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 Franklin Resources will offset losses from the drop in Franklin Resources' long position.| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
| Franklin Resources vs. BlackRock | Franklin Resources vs. Main Street Capital | Franklin Resources vs. Blackstone Group | Franklin Resources vs. Ares Capital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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