Correlation Between Ares Management and 3i Group
Can any of the company-specific risk be diversified away by investing in both Ares Management and 3i Group 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 3i Group 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 3i Group plc, you can compare the effects of market volatilities on Ares Management and 3i Group 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 3i Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and 3i Group.
Diversification Opportunities for Ares Management and 3i Group
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ares and TGOPF is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and 3i Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3i Group plc 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 3i Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3i Group plc has no effect on the direction of Ares Management i.e., Ares Management and 3i Group go up and down completely randomly.
Pair Corralation between Ares Management and 3i Group
Given the investment horizon of 90 days Ares Management LP is expected to generate 0.64 times more return on investment than 3i Group. However, Ares Management LP is 1.56 times less risky than 3i Group. It trades about 0.16 of its potential returns per unit of risk. 3i Group plc is currently generating about 0.04 per unit of risk. If you would invest 15,625 in Ares Management LP on August 24, 2024 and sell it today you would earn a total of 1,927 from holding Ares Management LP or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares Management LP vs. 3i Group plc
Performance |
| Timeline |
| Ares Management LP |
| 3i Group plc |
Ares Management and 3i Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and 3i Group
The main advantage of trading using opposite Ares Management and 3i Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, 3i Group 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 3i Group will offset losses from the drop in 3i Group'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 |
| 3i Group vs. Blackstone Group | 3i Group vs. BlackRock | 3i Group vs. Apollo Global Management | 3i Group vs. Investor AB ser |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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