Correlation Between Blue Owl and Fidelity Freedom

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

Diversification Opportunities for Blue Owl and Fidelity Freedom

0.28

Correlation Coefficient

Blue Owl  Fidelity Freedom

Modest diversification

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

Pair Corralation between Blue Owl and Fidelity Freedom

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 5.51 times more return on investment than Fidelity Freedom. However, Blue Owl is 5.51 times more volatile than Fidelity Freedom Index. It trades about 0.23 of its potential returns per unit of risk. Fidelity Freedom Index is currently generating about 0.05 per unit of risk. If you would invest  1,750  in Blue Owl Capital on August 30, 2024 and sell it today you would earn a total of  627.00  from holding Blue Owl Capital or generate 35.83% 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.  Fidelity Freedom Index

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.

Fidelity Freedom Index

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom Index are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Freedom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Owl and Fidelity Freedom

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

The idea behind Blue Owl Capital and Fidelity Freedom Index 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.