Correlation Between GREAT AJAX and ARES MREAL

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

By analyzing existing cross correlation between GREAT AJAX P and ARES MREAL ESTDL 01, you can compare the effects of market volatilities on GREAT AJAX and ARES MREAL 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 GREAT AJAX with a short position of ARES MREAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREAT AJAX and ARES MREAL.

Diversification Opportunities for GREAT AJAX and ARES MREAL

0.4

Correlation Coefficient

GREAT AJAX  ARES MREAL

Very weak diversification

The 3 months correlation between GREAT and ARES is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GREAT AJAX P and ARES MREAL ESTDL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARES MREAL ESTDL and GREAT AJAX 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 GREAT AJAX P are associated (or correlated) with ARES MREAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARES MREAL ESTDL has no effect on the direction of GREAT AJAX i.e., GREAT AJAX and ARES MREAL go up and down completely randomly.

Pair Corralation between GREAT AJAX and ARES MREAL

Assuming the 90 days horizon GREAT AJAX P is expected to under-perform the ARES MREAL. In addition to that, GREAT AJAX is 1.25 times more volatile than ARES MREAL ESTDL 01. It trades about -0.05 of its total potential returns per unit of risk. ARES MREAL ESTDL 01 is currently generating about -0.03 per unit of volatility. If you would invest  834.00  in ARES MREAL ESTDL 01 on October 26, 2024 and sell it today you would lose (285.00) from holding ARES MREAL ESTDL 01 or give up 34.17% of portfolio value over 90 days.

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

GREAT AJAX P  vs.  ARES MREAL ESTDL 01

GREAT AJAX P

Risk-Adjusted Performance

0 of 100

Very Weak

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

ARES MREAL ESTDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARES MREAL ESTDL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ARES MREAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GREAT AJAX and ARES MREAL

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

The idea behind GREAT AJAX P and ARES MREAL ESTDL 01 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.