Correlation Between Ares Management and BlackRock ESG

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

Diversification Opportunities for Ares Management and BlackRock ESG

0.45

Correlation Coefficient

Ares Management  BlackRock ESG

Very weak diversification

The 3 months correlation between Ares and BlackRock is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and BlackRock ESG Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Capital 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Capital has no effect on the direction of Ares Management i.e., Ares Management and BlackRock ESG go up and down completely randomly.

Pair Corralation between Ares Management and BlackRock ESG

Given the investment horizon of 90 days Ares Management LP is expected to generate 1.95 times more return on investment than BlackRock ESG. However, Ares Management is 1.95 times more volatile than BlackRock ESG Capital. It trades about 0.14 of its potential returns per unit of risk. BlackRock ESG Capital is currently generating about 0.06 per unit of risk. If you would invest  13,466  in Ares Management LP on September 28, 2024 and sell it today you would earn a total of  4,806  from holding Ares Management LP or generate 35.69% return on investment over 90 days.

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

Ares Management LP  vs.  BlackRock ESG Capital

Ares Management LP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ares Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

BlackRock ESG Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ares Management and BlackRock ESG

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

The idea behind Ares Management LP and BlackRock ESG Capital 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.