Correlation Between Dow Jones and Ares Management
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Ares Management, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Ares Management.
Diversification Opportunities for Dow Jones and Ares Management
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Ares is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Ares Management go up and down completely randomly.
Pair Corralation between Dow Jones and Ares Management
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.47 times more return on investment than Ares Management. However, Dow Jones Industrial is 2.13 times less risky than Ares Management. It trades about 0.29 of its potential returns per unit of risk. Ares Management is currently generating about 0.1 per unit of risk. If you would invest 4,273,213 in Dow Jones Industrial on November 4, 2024 and sell it today you would earn a total of 181,253 from holding Dow Jones Industrial or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Dow Jones Industrial vs. Ares Management
Performance |
| Timeline |
Dow Jones and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Ares Management
Pair trading matchups for Ares Management
Pair Trading with Dow Jones and Ares Management
The main advantage of trading using opposite Dow Jones and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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 Dow Jones Industrial and Ares Management 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. TechnipFMC plc | Ares Management vs. Autohome | Ares Management vs. Apartment Investment and | Ares Management vs. The Home Depot |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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