Correlation Between Ares Management and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Ares Management and Invesco Municipal 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 Invesco Municipal 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 Invesco Municipal Trust, you can compare the effects of market volatilities on Ares Management and Invesco Municipal 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 Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Invesco Municipal.
Diversification Opportunities for Ares Management and Invesco Municipal
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Invesco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust 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 Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Trust has no effect on the direction of Ares Management i.e., Ares Management and Invesco Municipal go up and down completely randomly.
Pair Corralation between Ares Management and Invesco Municipal
Given the investment horizon of 90 days Ares Management LP is expected to generate 2.94 times more return on investment than Invesco Municipal. However, Ares Management is 2.94 times more volatile than Invesco Municipal Trust. It trades about 0.08 of its potential returns per unit of risk. Invesco Municipal Trust is currently generating about 0.04 per unit of risk. If you would invest 17,098 in Ares Management LP on August 28, 2024 and sell it today you would earn a total of 505.00 from holding Ares Management LP or generate 2.95% 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. Invesco Municipal Trust
Performance |
| Timeline |
| Ares Management LP |
| Invesco Municipal Trust |
Ares Management and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares Management and Invesco Municipal
The main advantage of trading using opposite Ares Management and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Invesco Municipal 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 Invesco Municipal will offset losses from the drop in Invesco Municipal'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 |
| Invesco Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |