Correlation Between Ares Management and Abrdn Physical

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

Diversification Opportunities for Ares Management and Abrdn Physical

-0.03

Correlation Coefficient

Ares Management  Abrdn Physical

Good diversification

The 3 months correlation between Ares and Abrdn is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and abrdn Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn Physical Gold 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 Abrdn Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn Physical Gold has no effect on the direction of Ares Management i.e., Ares Management and Abrdn Physical go up and down completely randomly.

Pair Corralation between Ares Management and Abrdn Physical

Given the investment horizon of 90 days Ares Management LP is expected to generate 1.91 times more return on investment than Abrdn Physical. However, Ares Management is 1.91 times more volatile than abrdn Physical Gold. It trades about 0.15 of its potential returns per unit of risk. abrdn Physical Gold is currently generating about 0.1 per unit of risk. If you would invest  13,177  in Ares Management LP on September 26, 2024 and sell it today you would earn a total of  4,929  from holding Ares Management LP or generate 37.41% return on investment over 90 days.

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

Ares Management LP  vs.  abrdn Physical Gold

Ares Management LP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Ares Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

abrdn Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days abrdn Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Abrdn Physical 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 Abrdn Physical

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

The idea behind Ares Management LP and abrdn Physical Gold 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.