Correlation Between BlackRock TCP and Ares Management
Can any of the company-specific risk be diversified away by investing in both BlackRock TCP 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 BlackRock TCP and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock TCP Capital and Ares Management LP, you can compare the effects of market volatilities on BlackRock TCP 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 BlackRock TCP with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock TCP and Ares Management.
Diversification Opportunities for BlackRock TCP and Ares Management
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between BlackRock and Ares is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital 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 BlackRock TCP 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 BlackRock TCP Capital 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 BlackRock TCP i.e., BlackRock TCP and Ares Management go up and down completely randomly.
Pair Corralation between BlackRock TCP and Ares Management
Given the investment horizon of 90 days BlackRock TCP Capital is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock TCP Capital is 1.15 times less risky than Ares Management. The stock trades about -0.04 of its potential returns per unit of risk. The Ares Management LP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10,883 in Ares Management LP on August 27, 2024 and sell it today you would earn a total of 6,669 from holding Ares Management LP or generate 61.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock TCP Capital vs. Ares Management LP
Performance |
| Timeline |
| BlackRock TCP Capital |
| Ares Management LP |
BlackRock TCP and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock TCP and Ares Management
The main advantage of trading using opposite BlackRock TCP and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock TCP 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.| BlackRock TCP vs. PowerUp Acquisition Corp | BlackRock TCP vs. Aurora Innovation | BlackRock TCP vs. HUMANA INC | BlackRock TCP vs. Aquagold International |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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