Correlation Between Blue Owl and Ares Capital

Can any of the company-specific risk be diversified away by investing in both Blue Owl and Ares Capital 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 Ares Capital 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 Ares Capital, you can compare the effects of market volatilities on Blue Owl and Ares Capital 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 Ares Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Owl and Ares Capital.

Diversification Opportunities for Blue Owl and Ares Capital

0.39

Correlation Coefficient

Blue Owl  Ares Capital

Weak diversification

The 3 months correlation between Blue and Ares is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Ares Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Capital 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 Ares Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Capital has no effect on the direction of Blue Owl i.e., Blue Owl and Ares Capital go up and down completely randomly.

Pair Corralation between Blue Owl and Ares Capital

Considering the 90-day investment horizon Blue Owl Capital is expected to under-perform the Ares Capital. In addition to that, Blue Owl is 2.38 times more volatile than Ares Capital. It trades about -0.06 of its total potential returns per unit of risk. Ares Capital is currently generating about 0.06 per unit of volatility. If you would invest  2,145  in Ares Capital on December 26, 2024 and sell it today you would earn a total of  78.00  from holding Ares Capital or generate 3.64% return on investment over 90 days.

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

Blue Owl Capital  vs.  Ares Capital

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.

Ares Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ares Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blue Owl and Ares Capital

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

The idea behind Blue Owl Capital and Ares 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.