Correlation Between Ford and Ares Management
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ares Management, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ares Management.
Diversification Opportunities for Ford and Ares Management
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Ares is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management and Ford 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 Ford Motor 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 Ford i.e., Ford and Ares Management go up and down completely randomly.
Pair Corralation between Ford and Ares Management
Taking into account the 90-day investment horizon Ford is expected to generate 1.38 times less return on investment than Ares Management. In addition to that, Ford is 1.04 times more volatile than Ares Management. It trades about 0.07 of its total potential returns per unit of risk. Ares Management is currently generating about 0.1 per unit of volatility. If you would invest 11,190 in Ares Management on November 4, 2024 and sell it today you would earn a total of 361.00 from holding Ares Management or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ford Motor vs. Ares Management
Performance |
| Timeline |
| Ford Motor |
| Ares Management |
Ford and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ares Management
The main advantage of trading using opposite Ford and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets |