Correlation Between Ares Management and Terawulf

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Can any of the company-specific risk be diversified away by investing in both Ares Management and Terawulf 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 Terawulf 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 Terawulf, you can compare the effects of market volatilities on Ares Management and Terawulf 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 Terawulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Terawulf.

Diversification Opportunities for Ares Management and Terawulf

AresTerawulfDiversified AwayAresTerawulfDiversified Away100%
-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Ares and Terawulf is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Terawulf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terawulf 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 Terawulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terawulf has no effect on the direction of Ares Management i.e., Ares Management and Terawulf go up and down completely randomly.

Pair Corralation between Ares Management and Terawulf

Given the investment horizon of 90 days Ares Management LP is expected to generate 0.2 times more return on investment than Terawulf. However, Ares Management LP is 4.93 times less risky than Terawulf. It trades about -0.11 of its potential returns per unit of risk. Terawulf is currently generating about -0.09 per unit of risk. If you would invest  19,472  in Ares Management LP on November 21, 2024 and sell it today you would lose (705.00) from holding Ares Management LP or give up 3.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ares Management LP  vs.  Terawulf

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-10010
JavaScript chart by amCharts 3.21.15ARES WULF
       Timeline  
Ares Management LP 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ares Management may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb165170175180185190195200
Terawulf 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Terawulf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb56789

Ares Management and Terawulf Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.25-3.94-2.62-1.30.01.362.744.135.51 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15ARES WULF
       Returns  

Pair Trading with Ares Management and Terawulf

The main advantage of trading using opposite Ares Management and Terawulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Terawulf 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 Terawulf will offset losses from the drop in Terawulf's long position.
The idea behind Ares Management LP and Terawulf pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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