Correlation Between Blackstone and Ares Acquisition

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

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

Diversification Opportunities for Blackstone and Ares Acquisition

0.72

Correlation Coefficient

Blackstone  Ares Acquisition

Poor diversification

The 3 months correlation between Blackstone and Ares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Group and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition and Blackstone 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 Blackstone Group are associated (or correlated) with Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Blackstone i.e., Blackstone and Ares Acquisition go up and down completely randomly.

Pair Corralation between Blackstone and Ares Acquisition

Allowing for the 90-day total investment horizon Blackstone Group is expected to generate 14.5 times more return on investment than Ares Acquisition. However, Blackstone is 14.5 times more volatile than Ares Acquisition. It trades about 0.1 of its potential returns per unit of risk. Ares Acquisition is currently generating about 0.16 per unit of risk. If you would invest  8,622  in Blackstone Group on October 3, 2024 and sell it today you would earn a total of  8,583  from holding Blackstone Group or generate 99.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.49%
Values	Daily Returns

Blackstone Group  vs.  Ares Acquisition

Blackstone Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blackstone showed solid returns over the last few months and may actually be approaching a breakup point.

Ares Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition 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 Blackstone and Ares Acquisition

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

The idea behind Blackstone Group and Ares Acquisition 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.