Correlation Between NYSE Composite and Ares Management
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Ares Management LP, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Ares Management.
Diversification Opportunities for NYSE Composite and Ares Management
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Ares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Ares Management go up and down completely randomly.
Pair Corralation between NYSE Composite and Ares Management
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.6 times less return on investment than Ares Management. But when comparing it to its historical volatility, NYSE Composite is 2.42 times less risky than Ares Management. It trades about 0.08 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 6,796 in Ares Management LP on August 27, 2024 and sell it today you would earn a total of 10,756 from holding Ares Management LP or generate 158.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Ares Management LP
Performance |
| Timeline |
NYSE Composite and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Ares Management LP
Pair trading matchups for Ares Management
Pair Trading with NYSE Composite and Ares Management
The main advantage of trading using opposite NYSE Composite and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Hooker Furniture | NYSE Composite vs. Hudson Pacific Properties | NYSE Composite vs. Canlan Ice Sports | NYSE Composite vs. Boston Properties |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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