Correlation Between Ares Management and AGF Management

Can any of the company-specific risk be diversified away by investing in both Ares Management and AGF 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 Ares Management and AGF Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares Management Corp and AGF Management Limited, you can compare the effects of market volatilities on Ares Management and AGF 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 Ares Management with a short position of AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and AGF Management.

Diversification Opportunities for Ares Management and AGF Management

0.67

Correlation Coefficient

Ares Management  AGF Management

Poor diversification

The 3 months correlation between Ares and AGF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Ares Management 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 Ares Management Corp are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Ares Management i.e., Ares Management and AGF Management go up and down completely randomly.

Pair Corralation between Ares Management and AGF Management

Assuming the 90 days horizon Ares Management Corp is expected to under-perform the AGF Management. In addition to that, Ares Management is 1.12 times more volatile than AGF Management Limited. It trades about -0.11 of its total potential returns per unit of risk. AGF Management Limited is currently generating about -0.01 per unit of volatility. If you would invest  693.00  in AGF Management Limited on December 27, 2024 and sell it today you would lose (23.00) from holding AGF Management Limited or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ares Management Corp  vs.  AGF Management Limited

Ares Management Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ares Management and AGF Management

The main advantage of trading using opposite Ares Management and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, AGF 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 AGF Management will offset losses from the drop in AGF Management's long position.

The idea behind Ares Management Corp and AGF Management Limited 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .