Correlation Between Ares Management and CHRISTIAN DIOR

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Can any of the company-specific risk be diversified away by investing in both Ares Management and CHRISTIAN DIOR 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 CHRISTIAN DIOR 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 CHRISTIAN DIOR ADR14EO2, you can compare the effects of market volatilities on Ares Management and CHRISTIAN DIOR 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 CHRISTIAN DIOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and CHRISTIAN DIOR.

Diversification Opportunities for Ares Management and CHRISTIAN DIOR

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Ares and CHRISTIAN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and CHRISTIAN DIOR ADR14EO2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHRISTIAN DIOR ADR14EO2 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 CHRISTIAN DIOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHRISTIAN DIOR ADR14EO2 has no effect on the direction of Ares Management i.e., Ares Management and CHRISTIAN DIOR go up and down completely randomly.

Pair Corralation between Ares Management and CHRISTIAN DIOR

Assuming the 90 days horizon Ares Management Corp is expected to generate 1.14 times more return on investment than CHRISTIAN DIOR. However, Ares Management is 1.14 times more volatile than CHRISTIAN DIOR ADR14EO2. It trades about 0.14 of its potential returns per unit of risk. CHRISTIAN DIOR ADR14EO2 is currently generating about 0.12 per unit of risk. If you would invest  15,460  in Ares Management Corp on October 23, 2024 and sell it today you would earn a total of  3,026  from holding Ares Management Corp or generate 19.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.33%
ValuesDaily Returns

Ares Management Corp  vs.  CHRISTIAN DIOR ADR14EO2

 Performance 
       Timeline  
Ares Management Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.
CHRISTIAN DIOR ADR14EO2 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CHRISTIAN DIOR ADR14EO2 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CHRISTIAN DIOR reported solid returns over the last few months and may actually be approaching a breakup point.

Ares Management and CHRISTIAN DIOR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ares Management and CHRISTIAN DIOR

The main advantage of trading using opposite Ares Management and CHRISTIAN DIOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, CHRISTIAN DIOR 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 CHRISTIAN DIOR will offset losses from the drop in CHRISTIAN DIOR's long position.
The idea behind Ares Management Corp and CHRISTIAN DIOR ADR14EO2 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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