Correlation Between Federated Premier and Ares Management
Can any of the company-specific risk be diversified away by investing in both Federated Premier 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 Federated Premier and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and Ares Management LP, you can compare the effects of market volatilities on Federated Premier 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 Federated Premier with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and Ares Management.
Diversification Opportunities for Federated Premier and Ares Management
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Ares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal 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 Federated Premier 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 Federated Premier Municipal 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 Federated Premier i.e., Federated Premier and Ares Management go up and down completely randomly.
Pair Corralation between Federated Premier and Ares Management
Considering the 90-day investment horizon Federated Premier is expected to generate 4.62 times less return on investment than Ares Management. But when comparing it to its historical volatility, Federated Premier Municipal is 2.96 times less risky than Ares Management. It trades about 0.16 of its potential returns per unit of risk. Ares Management LP is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 18,106 in Ares Management LP on October 25, 2024 and sell it today you would earn a total of 1,484 from holding Ares Management LP or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. Ares Management LP
Performance |
| Timeline |
| Federated Premier |
| Ares Management LP |
Federated Premier and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and Ares Management
The main advantage of trading using opposite Federated Premier and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier 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.| Federated Premier vs. Munivest Fund | Federated Premier vs. MFS High Income | Federated Premier vs. Franklin Templeton Limited | Federated Premier vs. MFS Investment Grade |
| Ares Management vs. MFS Investment Grade | Ares Management vs. Eaton Vance National | Ares Management vs. Nuveen California Select | Ares Management vs. Federated Premier Municipal |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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