Correlation Between Ares Management and KKR Co
Can any of the company-specific risk be diversified away by investing in both Ares Management and KKR Co 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 KKR Co 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 KKR Co LP, you can compare the effects of market volatilities on Ares Management and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and KKR Co.
Diversification Opportunities for Ares Management and KKR Co
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ares and KKR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Ares Management i.e., Ares Management and KKR Co go up and down completely randomly.
Pair Corralation between Ares Management and KKR Co
Given the investment horizon of 90 days Ares Management is expected to generate 1.57 times less return on investment than KKR Co. But when comparing it to its historical volatility, Ares Management LP is 1.17 times less risky than KKR Co. It trades about 0.12 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,440 in KKR Co LP on August 27, 2024 and sell it today you would earn a total of 8,423 from holding KKR Co LP or generate 113.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. KKR Co LP
Performance |
| Timeline |
| Ares Management LP |
| KKR Co LP |
Ares Management and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and KKR Co
The main advantage of trading using opposite Ares Management and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co'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 |
| KKR Co vs. Carlyle Group | KKR Co vs. Ares Management LP | KKR Co vs. Blackstone Group | KKR Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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