Correlation Between Ares Management and BlackRock TCP
Can any of the company-specific risk be diversified away by investing in both Ares Management and BlackRock TCP 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 BlackRock TCP 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 BlackRock TCP Capital, you can compare the effects of market volatilities on Ares Management and BlackRock TCP 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 BlackRock TCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and BlackRock TCP.
Diversification Opportunities for Ares Management and BlackRock TCP
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ares and BlackRock is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and BlackRock TCP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock TCP Capital 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 BlackRock TCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock TCP Capital has no effect on the direction of Ares Management i.e., Ares Management and BlackRock TCP go up and down completely randomly.
Pair Corralation between Ares Management and BlackRock TCP
Given the investment horizon of 90 days Ares Management is expected to generate 2.01 times less return on investment than BlackRock TCP. But when comparing it to its historical volatility, Ares Management LP is 1.32 times less risky than BlackRock TCP. It trades about 0.11 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 825.00 in BlackRock TCP Capital on August 23, 2024 and sell it today you would earn a total of 74.00 from holding BlackRock TCP Capital or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. BlackRock TCP Capital
Performance |
| Timeline |
| Ares Management LP |
| BlackRock TCP Capital |
Ares Management and BlackRock TCP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and BlackRock TCP
The main advantage of trading using opposite Ares Management and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, BlackRock TCP 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 BlackRock TCP will offset losses from the drop in BlackRock TCP'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 |
| BlackRock TCP vs. Triplepoint Venture Growth | BlackRock TCP vs. Sixth Street Specialty | BlackRock TCP vs. Golub Capital BDC | BlackRock TCP vs. New Mountain Finance |
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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