Correlation Between Medallion Financial and Blue Owl

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

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

Diversification Opportunities for Medallion Financial and Blue Owl

-0.44

Correlation Coefficient

Medallion Financial  Blue Owl

Very good diversification

The 3 months correlation between Medallion and Blue is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Medallion Financial Corp 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 Medallion Financial 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 Medallion Financial Corp 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 Medallion Financial i.e., Medallion Financial and Blue Owl go up and down completely randomly.

Pair Corralation between Medallion Financial and Blue Owl

Given the investment horizon of 90 days Medallion Financial Corp is expected to under-perform the Blue Owl. In addition to that, Medallion Financial is 1.96 times more volatile than Blue Owl Capital. It trades about -0.03 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.01 per unit of volatility. If you would invest  1,490  in Blue Owl Capital on December 22, 2024 and sell it today you would earn a total of  8.00  from holding Blue Owl Capital or generate 0.54% return on investment over 90 days.

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

Medallion Financial Corp  vs.  Blue Owl Capital

Medallion Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medallion Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Medallion Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 1 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Medallion Financial and Blue Owl

The main advantage of trading using opposite Medallion Financial and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medallion Financial 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 Medallion Financial Corp 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .