Correlation Between Eaton Vance and Ares Management
Can any of the company-specific risk be diversified away by investing in both Eaton Vance 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 Eaton Vance and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eaton Vance Tax and Ares Management LP, you can compare the effects of market volatilities on Eaton Vance 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 Eaton Vance with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaton Vance and Ares Management.
Diversification Opportunities for Eaton Vance and Ares Management
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eaton and Ares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Eaton Vance Tax 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 Eaton Vance 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 Eaton Vance Tax 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 Eaton Vance i.e., Eaton Vance and Ares Management go up and down completely randomly.
Pair Corralation between Eaton Vance and Ares Management
Considering the 90-day investment horizon Eaton Vance is expected to generate 1.92 times less return on investment than Ares Management. But when comparing it to its historical volatility, Eaton Vance Tax is 2.06 times less risky than Ares Management. It trades about 0.13 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 13,772 in Ares Management LP on September 3, 2024 and sell it today you would earn a total of 3,901 from holding Ares Management LP or generate 28.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eaton Vance Tax vs. Ares Management LP
Performance |
| Timeline |
| Eaton Vance Tax |
| Ares Management LP |
Eaton Vance and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eaton Vance and Ares Management
The main advantage of trading using opposite Eaton Vance and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eaton Vance 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.| Eaton Vance vs. Eaton Vance Tax | Eaton Vance vs. Eaton Vance Tax Managed | Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Eaton Vance Tax |
| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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