Correlation Between Ares Management and Cartesian Growth
Can any of the company-specific risk be diversified away by investing in both Ares Management and Cartesian Growth 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 Cartesian Growth 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 Cartesian Growth, you can compare the effects of market volatilities on Ares Management and Cartesian Growth 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 Cartesian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Cartesian Growth.
Diversification Opportunities for Ares Management and Cartesian Growth
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ares and Cartesian is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth 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 Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Ares Management i.e., Ares Management and Cartesian Growth go up and down completely randomly.
Pair Corralation between Ares Management and Cartesian Growth
Given the investment horizon of 90 days Ares Management LP is expected to generate 1.85 times more return on investment than Cartesian Growth. However, Ares Management is 1.85 times more volatile than Cartesian Growth. It trades about 0.11 of its potential returns per unit of risk. Cartesian Growth is currently generating about -0.09 per unit of risk. If you would invest 14,171 in Ares Management LP on October 25, 2024 and sell it today you would earn a total of 5,210 from holding Ares Management LP or generate 36.77% 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. Cartesian Growth
Performance |
| Timeline |
| Ares Management LP |
| Cartesian Growth |
Ares Management and Cartesian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Cartesian Growth
The main advantage of trading using opposite Ares Management and Cartesian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Cartesian Growth 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 Cartesian Growth will offset losses from the drop in Cartesian Growth's long position.| Ares Management vs. MFS Investment Grade | Ares Management vs. Eaton Vance National | Ares Management vs. Nuveen California Select | Ares Management vs. Federated Premier Municipal |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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