Correlation Between TPG and Ares Management
Can any of the company-specific risk be diversified away by investing in both TPG 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 TPG and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TPG Inc and Ares Management LP, you can compare the effects of market volatilities on TPG 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 TPG with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of TPG and Ares Management.
Diversification Opportunities for TPG and Ares Management
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TPG and Ares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc 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 TPG 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 TPG Inc 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 TPG i.e., TPG and Ares Management go up and down completely randomly.
Pair Corralation between TPG and Ares Management
Considering the 90-day investment horizon TPG Inc is expected to generate 1.2 times more return on investment than Ares Management. However, TPG is 1.2 times more volatile than Ares Management LP. It trades about 0.16 of its potential returns per unit of risk. Ares Management LP is currently generating about 0.12 per unit of risk. If you would invest 3,383 in TPG Inc on August 26, 2024 and sell it today you would earn a total of 3,683 from holding TPG Inc or generate 108.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TPG Inc vs. Ares Management LP
Performance |
| Timeline |
| TPG Inc |
| Ares Management LP |
TPG and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TPG and Ares Management
The main advantage of trading using opposite TPG and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG 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.| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment Corp |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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