Correlation Between Oaktree Capital and Tri Continental

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

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

Diversification Opportunities for Oaktree Capital and Tri Continental

0.7

Correlation Coefficient

Oaktree Capital  Tri Continental

Poor diversification

The 3 months correlation between Oaktree and Tri is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Capital Group and Tri Continental PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental PFD and Oaktree Capital 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 Oaktree Capital Group are associated (or correlated) with Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental PFD has no effect on the direction of Oaktree Capital i.e., Oaktree Capital and Tri Continental go up and down completely randomly.

Pair Corralation between Oaktree Capital and Tri Continental

Assuming the 90 days trading horizon Oaktree Capital Group is expected to generate 1.52 times more return on investment than Tri Continental. However, Oaktree Capital is 1.52 times more volatile than Tri Continental PFD. It trades about 0.03 of its potential returns per unit of risk. Tri Continental PFD is currently generating about 0.0 per unit of risk. If you would invest  2,004  in Oaktree Capital Group on October 22, 2024 and sell it today you would earn a total of  266.00  from holding Oaktree Capital Group or generate 13.27% return on investment over 90 days.

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

Oaktree Capital Group  vs.  Tri Continental PFD

Oaktree Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Oaktree Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tri Continental PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental PFD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Oaktree Capital and Tri Continental

The main advantage of trading using opposite Oaktree Capital and Tri Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oaktree Capital position performs unexpectedly, Tri Continental 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 Tri Continental will offset losses from the drop in Tri Continental's long position.

The idea behind Oaktree Capital Group and Tri Continental PFD 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..