Correlation Between Ares Management and IShares Gold

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

Diversification Opportunities for Ares Management and IShares Gold

-0.53

Correlation Coefficient

Ares Management  IShares Gold

Excellent diversification

The 3 months correlation between Ares and IShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and iShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Gold Trust 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 IShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Gold Trust has no effect on the direction of Ares Management i.e., Ares Management and IShares Gold go up and down completely randomly.

Pair Corralation between Ares Management and IShares Gold

Given the investment horizon of 90 days Ares Management LP is expected to under-perform the IShares Gold. In addition to that, Ares Management is 3.12 times more volatile than iShares Gold Trust. It trades about -0.11 of its total potential returns per unit of risk. iShares Gold Trust is currently generating about 0.33 per unit of volatility. If you would invest  2,608  in iShares Gold Trust on December 27, 2024 and sell it today you would earn a total of  440.00  from holding iShares Gold Trust or generate 16.87% return on investment over 90 days.

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

Ares Management LP  vs.  iShares Gold Trust

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.

iShares Gold Trust

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Trust are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, IShares Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Management and IShares Gold

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

The idea behind Ares Management LP and iShares Gold Trust 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.