Correlation Between Blue Owl and Collegium Pharmaceutical

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

Diversification Opportunities for Blue Owl and Collegium Pharmaceutical

-0.62

Correlation Coefficient

Blue Owl  Collegium Pharmaceutical

Excellent diversification

The 3 months correlation between Blue and Collegium is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical 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 Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Blue Owl i.e., Blue Owl and Collegium Pharmaceutical go up and down completely randomly.

Pair Corralation between Blue Owl and Collegium Pharmaceutical

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 0.94 times more return on investment than Collegium Pharmaceutical. However, Blue Owl Capital is 1.06 times less risky than Collegium Pharmaceutical. It trades about 0.26 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about -0.13 per unit of risk. If you would invest  1,692  in Blue Owl Capital on September 1, 2024 and sell it today you would earn a total of  681.00  from holding Blue Owl Capital or generate 40.25% return on investment over 90 days.

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

Blue Owl Capital  vs.  Collegium Pharmaceutical

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.

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 weak 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.

Pair Trading with Blue Owl and Collegium Pharmaceutical

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

The idea behind Blue Owl Capital and Collegium Pharmaceutical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.