Correlation Between Blue Owl and Direxion Daily

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

Diversification Opportunities for Blue Owl and Direxion Daily

-0.72

Correlation Coefficient

Blue Owl  Direxion Daily

Pay attention - limited upside

The 3 months correlation between Blue and Direxion is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Direxion Daily FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily FTSE 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 Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily FTSE has no effect on the direction of Blue Owl i.e., Blue Owl and Direxion Daily go up and down completely randomly.

Pair Corralation between Blue Owl and Direxion Daily

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 1.08 times more return on investment than Direxion Daily. However, Blue Owl is 1.08 times more volatile than Direxion Daily FTSE. It trades about 0.06 of its potential returns per unit of risk. Direxion Daily FTSE is currently generating about -0.24 per unit of risk. If you would invest  2,309  in Blue Owl Capital on August 30, 2024 and sell it today you would earn a total of  68.00  from holding Blue Owl Capital or generate 2.94% return on investment over 90 days.

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

Blue Owl Capital  vs.  Direxion Daily FTSE

Blue Owl Capital

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Blue Owl disclosed solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily FTSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily FTSE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with Blue Owl and Direxion Daily

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

The idea behind Blue Owl Capital and Direxion Daily FTSE 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.