Correlation Between Caseys General and Ares Management
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Ares Management Corp, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Ares Management.
Diversification Opportunities for Caseys General and Ares Management
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caseys and Ares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores 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 Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Ares Management go up and down completely randomly.
Pair Corralation between Caseys General and Ares Management
Assuming the 90 days trading horizon Caseys General Stores is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, Caseys General Stores is 1.86 times less risky than Ares Management. The stock trades about -0.22 of its potential returns per unit of risk. The Ares Management Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 17,404 in Ares Management Corp on October 12, 2024 and sell it today you would lose (204.00) from holding Ares Management Corp or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Caseys General Stores vs. Ares Management Corp
Performance |
| Timeline |
| Caseys General Stores |
| Ares Management Corp |
Caseys General and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Ares Management
The main advantage of trading using opposite Caseys General and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc | Caseys General vs. Apple Inc |
| Ares Management vs. Caseys General Stores | Ares Management vs. BURLINGTON STORES | Ares Management vs. PACIFIC ONLINE | Ares Management vs. Fast Retailing Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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