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 Msci, 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

0.21

Correlation Coefficient

Ares Management  Trend Etf

Modest diversification

The 3 months correlation between Ares and Trend is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Trend Etf Msci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trend Etf Msci 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 Msci 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 generate 0.91 times more return on investment than Trend Etf. However, Ares Management is 1.09 times less risky than Trend Etf. It trades about 0.12 of its potential returns per unit of risk. Trend Etf Msci is currently generating about -0.25 per unit of risk. If you would invest  11,208  in Ares Management on October 25, 2024 and sell it today you would earn a total of  343.00  from holding Ares Management or generate 3.06% return on investment over 90 days.

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

Ares Management  vs.  Trend Etf Msci

Ares Management

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ares Management sustained solid returns over the last few months and may actually be approaching a breakup point.

Trend Etf Msci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trend Etf Msci has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Trend Etf is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 Msci 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.