Correlation Between Ares Management and Patria Investments
Can any of the company-specific risk be diversified away by investing in both Ares Management and Patria Investments 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 Patria Investments 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 Patria Investments, you can compare the effects of market volatilities on Ares Management and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Patria Investments.
Diversification Opportunities for Ares Management and Patria Investments
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ares and Patria is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Ares Management i.e., Ares Management and Patria Investments go up and down completely randomly.
Pair Corralation between Ares Management and Patria Investments
Given the investment horizon of 90 days Ares Management is expected to generate 2.56 times less return on investment than Patria Investments. In addition to that, Ares Management is 1.17 times more volatile than Patria Investments. It trades about 0.08 of its total potential returns per unit of risk. Patria Investments is currently generating about 0.23 per unit of volatility. If you would invest 1,160 in Patria Investments on August 27, 2024 and sell it today you would earn a total of 88.00 from holding Patria Investments or generate 7.59% 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. Patria Investments
Performance |
| Timeline |
| Ares Management LP |
| Patria Investments |
Ares Management and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Patria Investments
The main advantage of trading using opposite Ares Management and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
| Patria Investments vs. Invesco Advantage MIT | Patria Investments vs. Invesco Municipal Trust | Patria Investments vs. Invesco California Value | Patria Investments vs. Brightsphere Investment Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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