Correlation Between Mastercard and Blue Owl

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

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

Diversification Opportunities for Mastercard and Blue Owl

0.75

Correlation Coefficient

Mastercard  Blue Owl

Poor diversification

The 3 months correlation between Mastercard and Blue is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard 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 Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and Blue Owl go up and down completely randomly.

Pair Corralation between Mastercard and Blue Owl

Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.2 times more return on investment than Blue Owl. However, Mastercard is 1.2 times more volatile than Blue Owl Capital. It trades about 0.1 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.07 per unit of risk. If you would invest  42,199  in Mastercard on September 13, 2024 and sell it today you would earn a total of  11,246  from holding Mastercard or generate 26.65% return on investment over 90 days.

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

Mastercard  vs.  Blue Owl Capital

Mastercard

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blue Owl Capital

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Blue Owl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mastercard and Blue Owl

The main advantage of trading using opposite Mastercard and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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 Mastercard 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 Transaction History module to view history of all your transactions and understand their impact on performance.