Correlation Between Xtrackers LevDAX and Ares Management
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX 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 Xtrackers LevDAX and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Ares Management Corp, you can compare the effects of market volatilities on Xtrackers LevDAX 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 Xtrackers LevDAX with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Ares Management.
Diversification Opportunities for Xtrackers LevDAX and Ares Management
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and Ares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX 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 Xtrackers LevDAX 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 Xtrackers LevDAX 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 Xtrackers LevDAX i.e., Xtrackers LevDAX and Ares Management go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Ares Management
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 1.72 times less return on investment than Ares Management. But when comparing it to its historical volatility, Xtrackers LevDAX is 1.17 times less risky than Ares Management. It trades about 0.08 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,340 in Ares Management Corp on November 8, 2024 and sell it today you would earn a total of 11,716 from holding Ares Management Corp or generate 159.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Ares Management Corp
Performance |
| Timeline |
| Xtrackers LevDAX |
| Ares Management Corp |
Xtrackers LevDAX and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Ares Management
The main advantage of trading using opposite Xtrackers LevDAX and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX 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.| Xtrackers LevDAX vs. Xtrackers II Global | Xtrackers LevDAX vs. Xtrackers FTSE | Xtrackers LevDAX vs. Xtrackers SP 500 | Xtrackers LevDAX vs. Xtrackers MSCI |
| Ares Management vs. Blackstone Group | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial | Ares Management vs. State Street |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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