Correlation Between Cornerstone Strategic and Ares Management
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic 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 Cornerstone Strategic and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Return and Ares Management LP, you can compare the effects of market volatilities on Cornerstone Strategic 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 Cornerstone Strategic with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Ares Management.
Diversification Opportunities for Cornerstone Strategic and Ares Management
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cornerstone and Ares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return 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 Cornerstone Strategic 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 Cornerstone Strategic Return 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 Cornerstone Strategic i.e., Cornerstone Strategic and Ares Management go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and Ares Management
Considering the 90-day investment horizon Cornerstone Strategic is expected to generate 1.81 times less return on investment than Ares Management. But when comparing it to its historical volatility, Cornerstone Strategic Return is 1.34 times less risky than Ares Management. It trades about 0.09 of its potential returns per unit of risk. Ares Management LP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,245 in Ares Management LP on August 28, 2024 and sell it today you would earn a total of 8,358 from holding Ares Management LP or generate 90.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. Ares Management LP
Performance |
| Timeline |
| Cornerstone Strategic |
| Ares Management LP |
Cornerstone Strategic and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and Ares Management
The main advantage of trading using opposite Cornerstone Strategic and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic 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 Cornerstone Strategic Return and Ares Management LP 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. PowerUp Acquisition Corp | Ares Management vs. Aurora Innovation | Ares Management vs. HUMANA INC | Ares Management vs. Aquagold International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |