Correlation Between Iris Energy and Blue Owl

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

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

Diversification Opportunities for Iris Energy and Blue Owl

0.22

Correlation Coefficient

Iris Energy  Blue Owl

Modest diversification

The 3 months correlation between Iris and Blue is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Iris Energy 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 Iris Energy 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 Iris Energy 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 Iris Energy i.e., Iris Energy and Blue Owl go up and down completely randomly.

Pair Corralation between Iris Energy and Blue Owl

Given the investment horizon of 90 days Iris Energy is expected to under-perform the Blue Owl. In addition to that, Iris Energy is 6.03 times more volatile than Blue Owl Capital. It trades about -0.09 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.0 per unit of volatility. If you would invest  1,506  in Blue Owl Capital on December 24, 2024 and sell it today you would lose (8.00) from holding Blue Owl Capital or give up 0.53% of portfolio value over 90 days.

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

Iris Energy  vs.  Blue Owl Capital

Iris Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iris Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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. 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 Iris Energy and Blue Owl

The main advantage of trading using opposite Iris Energy and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iris Energy 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 Iris Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.