Correlation Between Franklin Resources and Ares Management
Can any of the company-specific risk be diversified away by investing in both Franklin Resources and Ares Management 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 Franklin Resources and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Resources and Ares Management LP, you can compare the effects of market volatilities on Franklin Resources and Ares Management 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 Franklin Resources with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Resources and Ares Management.
Diversification Opportunities for Franklin Resources and Ares Management
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and Ares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Resources and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and Franklin Resources 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 Franklin Resources are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management LP has no effect on the direction of Franklin Resources i.e., Franklin Resources and Ares Management go up and down completely randomly.
Pair Corralation between Franklin Resources and Ares Management
Considering the 90-day investment horizon Franklin Resources is expected to under-perform the Ares Management. In addition to that, Franklin Resources is 1.02 times more volatile than Ares Management LP. It trades about 0.0 of its total potential returns per unit of risk. Ares Management LP is currently generating about 0.12 per unit of volatility. If you would invest 6,812 in Ares Management LP on August 24, 2024 and sell it today you would earn a total of 10,689 from holding Ares Management LP or generate 156.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Resources vs. Ares Management LP
Performance |
| Timeline |
| Franklin Resources |
| Ares Management LP |
Franklin Resources and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Resources and Ares Management
The main advantage of trading using opposite Franklin Resources and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Resources position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Franklin Resources vs. BlackRock | Franklin Resources vs. Main Street Capital | Franklin Resources vs. Blackstone Group | Franklin Resources vs. Ares Capital |
| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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