Correlation Between American Express and Blue Owl

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

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

Diversification Opportunities for American Express and Blue Owl

0.33

Correlation Coefficient

American Express  Blue Owl

Weak diversification

The 3 months correlation between American and Blue is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Express 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 American Express 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 American Express 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 American Express i.e., American Express and Blue Owl go up and down completely randomly.

Pair Corralation between American Express and Blue Owl

Considering the 90-day investment horizon American Express is expected to under-perform the Blue Owl. In addition to that, American Express is 1.48 times more volatile than Blue Owl Capital. It trades about -0.11 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.03 per unit of volatility. If you would invest  1,501  in Blue Owl Capital on December 25, 2024 and sell it today you would earn a total of  24.00  from holding Blue Owl Capital or generate 1.6% return on investment over 90 days.

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

American Express  vs.  Blue Owl Capital

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Blue Owl Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Blue Owl is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with American Express and Blue Owl

The main advantage of trading using opposite American Express and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 American Express 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.