Correlation Between Blue Owl and Franklin Resources

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

Diversification Opportunities for Blue Owl and Franklin Resources

0.51

Correlation Coefficient

Blue Owl  Franklin Resources

Very weak diversification

The 3 months correlation between Blue and Franklin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources 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 Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Blue Owl i.e., Blue Owl and Franklin Resources go up and down completely randomly.

Pair Corralation between Blue Owl and Franklin Resources

Considering the 90-day investment horizon Blue Owl Capital is expected to under-perform the Franklin Resources. In addition to that, Blue Owl is 1.27 times more volatile than Franklin Resources. It trades about -0.05 of its total potential returns per unit of risk. Franklin Resources is currently generating about 0.0 per unit of volatility. If you would invest  2,011  in Franklin Resources on December 28, 2024 and sell it today you would lose (26.00) from holding Franklin Resources or give up 1.29% of portfolio value over 90 days.

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

Blue Owl Capital  vs.  Franklin Resources

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.

Franklin Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Franklin Resources is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Blue Owl and Franklin Resources

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

The idea behind Blue Owl Capital and Franklin Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..