Correlation Between Ares Management and Trend Etf

Can any of the company-specific risk be diversified away by investing in both Ares Management and Trend Etf 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 Trend Etf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares Management and Trend Etf Crsp, you can compare the effects of market volatilities on Ares Management and Trend Etf 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 Trend Etf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Trend Etf.

Diversification Opportunities for Ares Management and Trend Etf

0.75

Correlation Coefficient

Ares Management  Trend Etf

Poor diversification

The 3 months correlation between Ares and Trend is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Trend Etf Crsp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Etf Crsp 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 are associated (or correlated) with Trend Etf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trend Etf Crsp has no effect on the direction of Ares Management i.e., Ares Management and Trend Etf go up and down completely randomly.

Pair Corralation between Ares Management and Trend Etf

Assuming the 90 days trading horizon Ares Management is expected to under-perform the Trend Etf. In addition to that, Ares Management is 1.98 times more volatile than Trend Etf Crsp. It trades about -0.19 of its total potential returns per unit of risk. Trend Etf Crsp is currently generating about -0.19 per unit of volatility. If you would invest  1,577  in Trend Etf Crsp on December 22, 2024 and sell it today you would lose (194.00) from holding Trend Etf Crsp or give up 12.3% of portfolio value over 90 days.

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

Ares Management  vs.  Trend Etf Crsp

Ares Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trend Etf Crsp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trend Etf Crsp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Ares Management and Trend Etf

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

The idea behind Ares Management and Trend Etf Crsp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.