Correlation Between State Street and Ares Management
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and Ares Management LP, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Ares Management.
Diversification Opportunities for State Street and Ares Management
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Ares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp 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 State Street 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 State Street Corp 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 State Street i.e., State Street and Ares Management go up and down completely randomly.
Pair Corralation between State Street and Ares Management
Considering the 90-day investment horizon State Street Corp is expected to generate 0.79 times more return on investment than Ares Management. However, State Street Corp is 1.26 times less risky than Ares Management. It trades about 0.22 of its potential returns per unit of risk. Ares Management LP is currently generating about 0.11 per unit of risk. If you would invest 8,986 in State Street Corp on August 23, 2024 and sell it today you would earn a total of 648.00 from holding State Street Corp or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. Ares Management LP
Performance |
| Timeline |
| State Street Corp |
| Ares Management LP |
State Street and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Ares Management
The main advantage of trading using opposite State Street and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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