Correlation Between Brockhaus Capital and Ares Management

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

By analyzing existing cross correlation between Brockhaus Capital Management and Ares Management Corp, you can compare the effects of market volatilities on Brockhaus Capital and Ares Management 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 Brockhaus Capital with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brockhaus Capital and Ares Management.

Diversification Opportunities for Brockhaus Capital and Ares Management

-0.75

Correlation Coefficient

Brockhaus Capital  Ares Management

Pay attention - limited upside

The 3 months correlation between Brockhaus and Ares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and Brockhaus Capital 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 Brockhaus Capital Management are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Brockhaus Capital i.e., Brockhaus Capital and Ares Management go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Ares Management

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Ares Management. In addition to that, Brockhaus Capital is 1.06 times more volatile than Ares Management Corp. It trades about -0.13 of its total potential returns per unit of risk. Ares Management Corp is currently generating about 0.22 per unit of volatility. If you would invest  12,474  in Ares Management Corp on September 11, 2024 and sell it today you would earn a total of  4,190  from holding Ares Management Corp or generate 33.59% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Ares Management Corp

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ares Management Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and Ares Management

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

The idea behind Brockhaus Capital Management and Ares Management Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.