Correlation Between Blue Owl and ADT

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

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

Diversification Opportunities for Blue Owl and ADT

-0.28

Correlation Coefficient

Blue Owl  ADT

Very good diversification

The 3 months correlation between Blue and ADT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc and Blue Owl 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 Blue Owl Capital are associated (or correlated) with ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of Blue Owl i.e., Blue Owl and ADT go up and down completely randomly.

Pair Corralation between Blue Owl and ADT

Considering the 90-day investment horizon Blue Owl Capital is expected to under-perform the ADT. In addition to that, Blue Owl is 1.32 times more volatile than ADT Inc. It trades about -0.05 of its total potential returns per unit of risk. ADT Inc is currently generating about 0.15 per unit of volatility. If you would invest  692.00  in ADT Inc on December 27, 2024 and sell it today you would earn a total of  125.00  from holding ADT Inc or generate 18.06% return on investment over 90 days.

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

Blue Owl Capital  vs.  ADT Inc

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. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

ADT Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADT Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, ADT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Owl and ADT

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

The idea behind Blue Owl Capital and ADT Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.