Correlation Between Ares Management and Gores Holdings
Can any of the company-specific risk be diversified away by investing in both Ares Management and Gores Holdings 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 Gores Holdings 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 Gores Holdings IX, you can compare the effects of market volatilities on Ares Management and Gores Holdings 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 Gores Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Gores Holdings.
Diversification Opportunities for Ares Management and Gores Holdings
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and Gores is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Gores Holdings IX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gores Holdings IX 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 Gores Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gores Holdings IX has no effect on the direction of Ares Management i.e., Ares Management and Gores Holdings go up and down completely randomly.
Pair Corralation between Ares Management and Gores Holdings
Given the investment horizon of 90 days Ares Management is expected to generate 304.74 times less return on investment than Gores Holdings. But when comparing it to its historical volatility, Ares Management LP is 148.24 times less risky than Gores Holdings. It trades about 0.12 of its potential returns per unit of risk. Gores Holdings IX is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Gores Holdings IX on September 1, 2024 and sell it today you would lose (9.84) from holding Gores Holdings IX or give up 98.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 50.79% |
| Values | Daily Returns |
Ares Management LP vs. Gores Holdings IX
Performance |
| Timeline |
| Ares Management LP |
| Gores Holdings IX |
Ares Management and Gores Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Gores Holdings
The main advantage of trading using opposite Ares Management and Gores Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Gores Holdings 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 Gores Holdings will offset losses from the drop in Gores Holdings' long position.| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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