Correlation Between Blue Owl and Invesco DB

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

Diversification Opportunities for Blue Owl and Invesco DB

0.46

Correlation Coefficient

Blue Owl  Invesco DB

Very weak diversification

The 3 months correlation between Blue and Invesco is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Invesco DB Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Agriculture 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 Invesco DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Agriculture has no effect on the direction of Blue Owl i.e., Blue Owl and Invesco DB go up and down completely randomly.

Pair Corralation between Blue Owl and Invesco DB

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 2.52 times more return on investment than Invesco DB. However, Blue Owl is 2.52 times more volatile than Invesco DB Agriculture. It trades about 0.12 of its potential returns per unit of risk. Invesco DB Agriculture is currently generating about 0.1 per unit of risk. If you would invest  1,722  in Blue Owl Capital on September 30, 2024 and sell it today you would earn a total of  639.00  from holding Blue Owl Capital or generate 37.11% return on investment over 90 days.

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

Blue Owl Capital  vs.  Invesco DB Agriculture

Blue Owl Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Blue Owl disclosed solid returns over the last few months and may actually be approaching a breakup point.

Invesco DB Agriculture

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DB Agriculture are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Invesco DB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Owl and Invesco DB

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

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