Correlation Between Ares Management and Rock Tech
Can any of the company-specific risk be diversified away by investing in both Ares Management and Rock Tech 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 Rock Tech 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 Rock Tech Lithium, you can compare the effects of market volatilities on Ares Management and Rock Tech 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 Rock Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Rock Tech.
Diversification Opportunities for Ares Management and Rock Tech
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ares and Rock is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Rock Tech Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Tech Lithium 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 Rock Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Tech Lithium has no effect on the direction of Ares Management i.e., Ares Management and Rock Tech go up and down completely randomly.
Pair Corralation between Ares Management and Rock Tech
Assuming the 90 days horizon Ares Management is expected to generate 5.02 times less return on investment than Rock Tech. But when comparing it to its historical volatility, Ares Management Corp is 3.88 times less risky than Rock Tech. It trades about 0.03 of its potential returns per unit of risk. Rock Tech Lithium is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Rock Tech Lithium on September 25, 2024 and sell it today you would earn a total of 1.00 from holding Rock Tech Lithium or generate 1.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Ares Management Corp vs. Rock Tech Lithium
Performance |
Timeline |
Ares Management Corp |
Rock Tech Lithium |
Ares Management and Rock Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ares Management and Rock Tech
The main advantage of trading using opposite Ares Management and Rock Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management position performs unexpectedly, Rock Tech 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 Rock Tech will offset losses from the drop in Rock Tech's long position.Ares Management vs. Grupo Carso SAB | Ares Management vs. MUTUIONLINE | Ares Management vs. CECO ENVIRONMENTAL | Ares Management vs. RELIANCE STEEL AL |
Rock Tech vs. ScanSource | Rock Tech vs. WILLIS LEASE FIN | Rock Tech vs. Sixt Leasing SE | Rock Tech vs. Ares Management Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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