Correlation Between Ares Management and BlackRock

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

Diversification Opportunities for Ares Management and BlackRock

0.12

Correlation Coefficient

Ares Management  BlackRock

Average diversification

The 3 months correlation between Ares and BlackRock is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Ares Management i.e., Ares Management and BlackRock go up and down completely randomly.

Pair Corralation between Ares Management and BlackRock

Given the investment horizon of 90 days Ares Management LP is expected to generate 1.2 times more return on investment than BlackRock. However, Ares Management is 1.2 times more volatile than BlackRock. It trades about -0.04 of its potential returns per unit of risk. BlackRock is currently generating about -0.06 per unit of risk. If you would invest  17,584  in Ares Management LP on November 28, 2024 and sell it today you would lose (848.00) from holding Ares Management LP or give up 4.82% of portfolio value over 90 days.

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

Ares Management LP  vs.  BlackRock

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 comparatively stable technical and fundamental indicators, Ares Management is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ares Management and BlackRock

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

The idea behind Ares Management LP and BlackRock 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.