Correlation Between FG Annuities and Ares Management

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

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

Diversification Opportunities for FG Annuities and Ares Management

0.66

Correlation Coefficient

FG Annuities  Ares Management

Poor diversification

The 3 months correlation between FG Annuities and Ares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FG Annuities Life 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 FG Annuities 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 FG Annuities Life 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 FG Annuities i.e., FG Annuities and Ares Management go up and down completely randomly.

Pair Corralation between FG Annuities and Ares Management

Allowing for the 90-day total investment horizon FG Annuities Life is expected to under-perform the Ares Management. In addition to that, FG Annuities is 1.24 times more volatile than Ares Management LP. It trades about -0.16 of its total potential returns per unit of risk. Ares Management LP is currently generating about -0.17 per unit of volatility. If you would invest  16,582  in Ares Management LP on December 29, 2024 and sell it today you would lose (2,092) from holding Ares Management LP or give up 12.62% of portfolio value over 90 days.

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

FG Annuities Life  vs.  Ares Management LP

FG Annuities Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days FG Annuities Life has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with FG Annuities and Ares Management

The main advantage of trading using opposite FG Annuities and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FG Annuities 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 FG Annuities Life 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.