Correlation Between Air New and Ares Management
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Ares Management Corp, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Ares Management.
Diversification Opportunities for Air New and Ares Management
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Air and Ares is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and Air New 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 Air New Zealand 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 Corp has no effect on the direction of Air New i.e., Air New and Ares Management go up and down completely randomly.
Pair Corralation between Air New and Ares Management
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the Ares Management. In addition to that, Air New is 1.17 times more volatile than Ares Management Corp. It trades about -0.06 of its total potential returns per unit of risk. Ares Management Corp is currently generating about -0.03 per unit of volatility. If you would invest 16,413 in Ares Management Corp on September 22, 2024 and sell it today you would lose (227.00) from holding Ares Management Corp or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Ares Management Corp
Performance |
| Timeline |
| Air New Zealand |
| Ares Management Corp |
Air New and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Ares Management
The main advantage of trading using opposite Air New and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.The idea behind Air New Zealand and Ares Management Corp 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.| Ares Management vs. Ameriprise Financial | Ares Management vs. Superior Plus Corp | Ares Management vs. SIVERS SEMICONDUCTORS AB | Ares Management vs. CHINA HUARONG ENERHD 50 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |