Correlation Between Ares Management and MTI INVESTMENT

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

Diversification Opportunities for Ares Management and MTI INVESTMENT

-0.85

Correlation Coefficient

Ares Management  MTI INVESTMENT

Pay attention - limited upside

The 3 months correlation between Ares and MTI is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and MTI INVESTMENT SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI INVESTMENT SE 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 MTI INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI INVESTMENT SE has no effect on the direction of Ares Management i.e., Ares Management and MTI INVESTMENT go up and down completely randomly.

Pair Corralation between Ares Management and MTI INVESTMENT

Assuming the 90 days horizon Ares Management Corp is expected to generate 0.82 times more return on investment than MTI INVESTMENT. However, Ares Management Corp is 1.22 times less risky than MTI INVESTMENT. It trades about 0.09 of its potential returns per unit of risk. MTI INVESTMENT SE is currently generating about -0.34 per unit of risk. If you would invest  16,618  in Ares Management Corp on October 6, 2024 and sell it today you would earn a total of  474.00  from holding Ares Management Corp or generate 2.85% return on investment over 90 days.

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

Ares Management Corp  vs.  MTI INVESTMENT SE

Ares Management Corp

Risk-Adjusted Performance

10 of 100

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.

MTI INVESTMENT SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ares Management and MTI INVESTMENT

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

The idea behind Ares Management Corp and MTI INVESTMENT SE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.