Correlation Between Cable One and Ares Management
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Ares Management, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Ares Management.
Diversification Opportunities for Cable One and Ares Management
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cable and Ares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management and Cable One 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 Cable One 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 has no effect on the direction of Cable One i.e., Cable One and Ares Management go up and down completely randomly.
Pair Corralation between Cable One and Ares Management
Assuming the 90 days trading horizon Cable One is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 1.73 times less risky than Ares Management. The stock trades about -0.31 of its potential returns per unit of risk. The Ares Management is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 11,172 in Ares Management on October 14, 2024 and sell it today you would lose (280.00) from holding Ares Management or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Ares Management
Performance |
| Timeline |
| Cable One |
| Ares Management |
Cable One and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Ares Management
The main advantage of trading using opposite Cable One and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.| Cable One vs. Truist Financial | Cable One vs. Verizon Communications | Cable One vs. METISA Metalrgica Timboense | Cable One vs. Metalrgica Riosulense SA |
| Ares Management vs. Taiwan Semiconductor Manufacturing | Ares Management vs. Apple Inc | Ares Management vs. Alibaba Group Holding | Ares Management vs. Banco Santander Chile |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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