Correlation Between Ares Management and Teledyne Technologies

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

Diversification Opportunities for Ares Management and Teledyne Technologies

0.84

Correlation Coefficient

Ares Management  Teledyne Technologies

Very poor diversification

The 3 months correlation between Ares and Teledyne is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management Corp and Teledyne Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teledyne Technologies 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 Teledyne Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teledyne Technologies has no effect on the direction of Ares Management i.e., Ares Management and Teledyne Technologies go up and down completely randomly.

Pair Corralation between Ares Management and Teledyne Technologies

Assuming the 90 days horizon Ares Management Corp is expected to generate 1.31 times more return on investment than Teledyne Technologies. However, Ares Management is 1.31 times more volatile than Teledyne Technologies Incorporated. It trades about 0.12 of its potential returns per unit of risk. Teledyne Technologies Incorporated is currently generating about 0.03 per unit of risk. If you would invest  6,579  in Ares Management Corp on October 11, 2024 and sell it today you would earn a total of  10,923  from holding Ares Management Corp or generate 166.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Ares Management Corp  vs.  Teledyne Technologies Incorpor

Ares Management Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 12 (%) 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.

Teledyne Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teledyne Technologies Incorporated are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Teledyne Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ares Management and Teledyne Technologies

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

The idea behind Ares Management Corp and Teledyne Technologies Incorporated 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..