Correlation Between Chia and Ares Management
Can any of the company-specific risk be diversified away by investing in both Chia 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 Chia and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and Ares Management LP, you can compare the effects of market volatilities on Chia 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 Chia with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Ares Management.
Diversification Opportunities for Chia and Ares Management
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chia and Ares is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chia 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 Chia 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 Chia 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 Chia i.e., Chia and Ares Management go up and down completely randomly.
Pair Corralation between Chia and Ares Management
Assuming the 90 days trading horizon Chia is expected to under-perform the Ares Management. In addition to that, Chia is 3.73 times more volatile than Ares Management LP. It trades about -0.15 of its total potential returns per unit of risk. Ares Management LP is currently generating about 0.26 per unit of volatility. If you would invest 17,703 in Ares Management LP on November 1, 2024 and sell it today you would earn a total of 1,639 from holding Ares Management LP or generate 9.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Chia vs. Ares Management LP
Performance |
| Timeline |
| Chia |
| Ares Management LP |
Chia and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and Ares Management
The main advantage of trading using opposite Chia and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia 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.The idea behind Chia and Ares Management LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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