Correlation Between Owl Rock and Visa

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

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

Diversification Opportunities for Owl Rock and Visa

0.86

Correlation Coefficient

Owl Rock  Visa

Very poor diversification

The 3 months correlation between Owl and Visa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Owl Rock Capital and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A and Owl Rock 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 Owl Rock Capital are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of Owl Rock i.e., Owl Rock and Visa go up and down completely randomly.

Pair Corralation between Owl Rock and Visa

Given the investment horizon of 90 days Owl Rock Capital is expected to generate 1.33 times more return on investment than Visa. However, Owl Rock is 1.33 times more volatile than Visa Class A. It trades about 0.13 of its potential returns per unit of risk. Visa Class A is currently generating about 0.09 per unit of risk. If you would invest  1,090  in Owl Rock Capital on September 20, 2024 and sell it today you would earn a total of  258.00  from holding Owl Rock Capital or generate 23.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	25.81%
Values	Daily Returns

Owl Rock Capital  vs.  Visa Class A

Owl Rock Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Owl Rock Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Owl Rock is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Visa Class A

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Owl Rock and Visa

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

The idea behind Owl Rock Capital and Visa Class A 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.