Correlation Between Collegium Pharmaceutical and Blue Owl

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

By analyzing existing cross correlation between Collegium Pharmaceutical and Blue Owl Capital, you can compare the effects of market volatilities on Collegium Pharmaceutical and Blue Owl 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 Collegium Pharmaceutical with a short position of Blue Owl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Blue Owl.

Diversification Opportunities for Collegium Pharmaceutical and Blue Owl

-0.61

Correlation Coefficient

Collegium Pharmaceutical  Blue Owl

Excellent diversification

The 3 months correlation between Collegium and Blue is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Blue Owl Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Owl Capital and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Blue Owl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Owl Capital has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Blue Owl go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Blue Owl

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Blue Owl. In addition to that, Collegium Pharmaceutical is 1.05 times more volatile than Blue Owl Capital. It trades about -0.14 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.23 per unit of volatility. If you would invest  1,750  in Blue Owl Capital on August 30, 2024 and sell it today you would earn a total of  627.00  from holding Blue Owl Capital or generate 35.83% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  Blue Owl Capital

Collegium Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collegium Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Blue Owl Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Blue Owl disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collegium Pharmaceutical and Blue Owl

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

The idea behind Collegium Pharmaceutical and Blue Owl Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.