Correlation Between BlackRock ESG and Blue Owl

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

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

Diversification Opportunities for BlackRock ESG and Blue Owl

0.36

Correlation Coefficient

BlackRock ESG  Blue Owl

Weak diversification

The 3 months correlation between BlackRock and Blue is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital 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 BlackRock ESG 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 BlackRock ESG Capital 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 BlackRock ESG i.e., BlackRock ESG and Blue Owl go up and down completely randomly.

Pair Corralation between BlackRock ESG and Blue Owl

Given the investment horizon of 90 days BlackRock ESG is expected to generate 2.01 times less return on investment than Blue Owl. But when comparing it to its historical volatility, BlackRock ESG Capital is 2.41 times less risky than Blue Owl. It trades about 0.11 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,038  in Blue Owl Capital on September 28, 2024 and sell it today you would earn a total of  1,364  from holding Blue Owl Capital or generate 131.41% return on investment over 90 days.

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

BlackRock ESG Capital  vs.  Blue Owl Capital

BlackRock ESG Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Blue Owl Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 12 (%) 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.

Pair Trading with BlackRock ESG and Blue Owl

The main advantage of trading using opposite BlackRock ESG and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ESG 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 BlackRock ESG Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.