Correlation Between Ares Management and Apollo Global

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

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

Diversification Opportunities for Ares Management and Apollo Global

0.89

Correlation Coefficient

Ares Management  Apollo Global

Very poor diversification

The 3 months correlation between Ares and Apollo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Apollo Global Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Global Management 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 LP are associated (or correlated) with Apollo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Global Management has no effect on the direction of Ares Management i.e., Ares Management and Apollo Global go up and down completely randomly.

Pair Corralation between Ares Management and Apollo Global

Given the investment horizon of 90 days Ares Management LP is expected to under-perform the Apollo Global. In addition to that, Ares Management is 1.07 times more volatile than Apollo Global Management. It trades about -0.11 of its total potential returns per unit of risk. Apollo Global Management is currently generating about -0.1 per unit of volatility. If you would invest  16,604  in Apollo Global Management on December 28, 2024 and sell it today you would lose (2,401) from holding Apollo Global Management or give up 14.46% of portfolio value over 90 days.

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

Ares Management LP  vs.  Apollo Global Management

Ares Management LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Management LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Apollo Global Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Global Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ares Management and Apollo Global

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

The idea behind Ares Management LP and Apollo Global Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.