Correlation Between Blue Owl and Alcoa Corp

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

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

Diversification Opportunities for Blue Owl and Alcoa Corp

0.95

Correlation Coefficient

Blue Owl  Alcoa Corp

Almost no diversification

The 3 months correlation between Blue and Alcoa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and Blue Owl 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 Blue Owl Capital are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Blue Owl i.e., Blue Owl and Alcoa Corp go up and down completely randomly.

Pair Corralation between Blue Owl and Alcoa Corp

Considering the 90-day investment horizon Blue Owl is expected to generate 1.31 times less return on investment than Alcoa Corp. But when comparing it to its historical volatility, Blue Owl Capital is 1.42 times less risky than Alcoa Corp. It trades about 0.26 of its potential returns per unit of risk. Alcoa Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,015  in Alcoa Corp on September 1, 2024 and sell it today you would earn a total of  1,628  from holding Alcoa Corp or generate 54.0% return on investment over 90 days.

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

Blue Owl Capital  vs.  Alcoa Corp

Blue Owl Capital

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Blue Owl disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alcoa Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alcoa Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Alcoa Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Owl and Alcoa Corp

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

The idea behind Blue Owl Capital and Alcoa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.