Correlation Between CF Acquisition and Ares Management

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

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

Diversification Opportunities for CF Acquisition and Ares Management

0.0

Correlation Coefficient

CF Acquisition  Ares Management

Pay attention - limited upside

The 3 months correlation between CFFS and Ares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition VII and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and CF Acquisition 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 CF Acquisition VII 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 LP has no effect on the direction of CF Acquisition i.e., CF Acquisition and Ares Management go up and down completely randomly.

Pair Corralation between CF Acquisition and Ares Management

If you would invest (100.00) in CF Acquisition VII on November 28, 2024 and sell it today you would earn a total of  100.00  from holding CF Acquisition VII or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CF Acquisition VII  vs.  Ares Management LP

CF Acquisition VII

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Acquisition VII has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, CF Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 comparatively stable technical and fundamental indicators, Ares Management 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 CF Acquisition and Ares Management

The main advantage of trading using opposite CF Acquisition and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition 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 CF Acquisition VII and Ares Management LP 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.