Correlation Between Ares Management and Investment
Can any of the company-specific risk be diversified away by investing in both Ares Management and Investment 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 Investment 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 Investment AB Latour, you can compare the effects of market volatilities on Ares Management and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Investment.
Diversification Opportunities for Ares Management and Investment
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ares and Investment is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Investment AB Latour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Latour 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Latour has no effect on the direction of Ares Management i.e., Ares Management and Investment go up and down completely randomly.
Pair Corralation between Ares Management and Investment
Given the investment horizon of 90 days Ares Management LP is expected to generate 1.82 times more return on investment than Investment. However, Ares Management is 1.82 times more volatile than Investment AB Latour. It trades about 0.28 of its potential returns per unit of risk. Investment AB Latour is currently generating about -0.27 per unit of risk. If you would invest 17,883 in Ares Management LP on November 3, 2024 and sell it today you would earn a total of 1,939 from holding Ares Management LP or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. Investment AB Latour
Performance |
| Timeline |
| Ares Management LP |
| Investment AB Latour |
Ares Management and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Investment
The main advantage of trading using opposite Ares Management and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment'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 |
| Investment vs. Guardian Capital Group | Investment vs. Princeton Capital | Investment vs. SMC Entertainment | Investment vs. 1812 Brewing |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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