Correlation Between Carlyle and Blue Owl

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

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

Diversification Opportunities for Carlyle and Blue Owl

0.8

Correlation Coefficient

Carlyle  Blue Owl

Very poor diversification

The 3 months correlation between Carlyle and Blue is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group 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 Carlyle 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 Carlyle Group 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 Carlyle i.e., Carlyle and Blue Owl go up and down completely randomly.

Pair Corralation between Carlyle and Blue Owl

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 1.0 times more return on investment than Blue Owl. However, Carlyle is 1.0 times more volatile than Blue Owl Capital. It trades about -0.29 of its potential returns per unit of risk. Blue Owl Capital is currently generating about -0.39 per unit of risk. If you would invest  5,538  in Carlyle Group on November 28, 2024 and sell it today you would lose (649.00) from holding Carlyle Group or give up 11.72% of portfolio value over 90 days.

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

Carlyle Group  vs.  Blue Owl Capital

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Blue Owl Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Owl Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Carlyle and Blue Owl

The main advantage of trading using opposite Carlyle and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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 Carlyle Group 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 Valuation module to check real value of public entities based on technical and fundamental data.