Correlation Between Blue Owl and FT Cboe

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

Diversification Opportunities for Blue Owl and FT Cboe

0.01

Correlation Coefficient

Blue Owl  FT Cboe

Significant diversification

The 3 months correlation between Blue and IGLD is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Blue Owl i.e., Blue Owl and FT Cboe go up and down completely randomly.

Pair Corralation between Blue Owl and FT Cboe

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 2.59 times more return on investment than FT Cboe. However, Blue Owl is 2.59 times more volatile than FT Cboe Vest. It trades about 0.17 of its potential returns per unit of risk. FT Cboe Vest is currently generating about -0.02 per unit of risk. If you would invest  1,909  in Blue Owl Capital on September 27, 2024 and sell it today you would earn a total of  498.00  from holding Blue Owl Capital or generate 26.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blue Owl Capital  vs.  FT Cboe Vest

Blue Owl Capital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 13 (%) 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.

FT Cboe Vest

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Blue Owl and FT Cboe

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

The idea behind Blue Owl Capital and FT Cboe Vest 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.