Correlation Between Ares Management and Fomo Corp

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

Diversification Opportunities for Ares Management and Fomo Corp

-0.59

Correlation Coefficient

Ares Management  Fomo Corp

Excellent diversification

The 3 months correlation between Ares and Fomo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management LP and Fomo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomo Corp 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 Fomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomo Corp has no effect on the direction of Ares Management i.e., Ares Management and Fomo Corp go up and down completely randomly.

Pair Corralation between Ares Management and Fomo Corp

If you would invest  17,390  in Ares Management LP on September 28, 2024 and sell it today you would earn a total of  882.00  from holding Ares Management LP or generate 5.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Ares Management LP  vs.  Fomo Corp

Ares Management LP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ares Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fomo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fomo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Fomo Corp is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ares Management and Fomo Corp

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

The idea behind Ares Management LP and Fomo 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.