Correlation Between National Health and Ares Management
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Ares Management Corp, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Ares Management.
Diversification Opportunities for National Health and Ares Management
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Ares is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and National Health 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 National Health Investors 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 Corp has no effect on the direction of National Health i.e., National Health and Ares Management go up and down completely randomly.
Pair Corralation between National Health and Ares Management
Assuming the 90 days trading horizon National Health is expected to generate 1.35 times less return on investment than Ares Management. But when comparing it to its historical volatility, National Health Investors is 1.21 times less risky than Ares Management. It trades about 0.1 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 12,611 in Ares Management Corp on September 3, 2024 and sell it today you would earn a total of 3,841 from holding Ares Management Corp or generate 30.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Ares Management Corp
Performance |
| Timeline |
| National Health Investors |
| Ares Management Corp |
National Health and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Ares Management
The main advantage of trading using opposite National Health and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| Ares Management vs. Blackstone Group | Ares Management vs. BlackRock | Ares Management vs. The Bank of | Ares Management vs. Ameriprise Financial |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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