Correlation Between Ares Commercial and TPG RE

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

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

Diversification Opportunities for Ares Commercial and TPG RE

0.33

Correlation Coefficient

Ares Commercial  TPG RE

Weak diversification

The 3 months correlation between Ares and TPG is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ares Commercial Real and TPG RE Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG RE Finance and Ares Commercial 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 Commercial Real are associated (or correlated) with TPG RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG RE Finance has no effect on the direction of Ares Commercial i.e., Ares Commercial and TPG RE go up and down completely randomly.

Pair Corralation between Ares Commercial and TPG RE

Given the investment horizon of 90 days Ares Commercial is expected to generate 44.34 times less return on investment than TPG RE. In addition to that, Ares Commercial is 1.21 times more volatile than TPG RE Finance. It trades about 0.0 of its total potential returns per unit of risk. TPG RE Finance is currently generating about 0.24 per unit of volatility. If you would invest  729.00  in TPG RE Finance on May 7, 2025 and sell it today you would earn a total of  163.00  from holding TPG RE Finance or generate 22.36% return on investment over 90 days.

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

Ares Commercial Real  vs.  TPG RE Finance

Ares Commercial Real

Risk-Adjusted Performance

Modest

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

TPG RE Finance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TPG RE Finance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, TPG RE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Commercial and TPG RE

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

The idea behind Ares Commercial Real and TPG RE Finance 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.