Correlation Between Blue Owl and KVH Industries

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

Diversification Opportunities for Blue Owl and KVH Industries

0.59

Correlation Coefficient

Blue Owl  KVH Industries

Very weak diversification

The 3 months correlation between Blue and KVH is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Blue Owl i.e., Blue Owl and KVH Industries go up and down completely randomly.

Pair Corralation between Blue Owl and KVH Industries

Considering the 90-day investment horizon Blue Owl Capital is expected to generate 0.98 times more return on investment than KVH Industries. However, Blue Owl Capital is 1.02 times less risky than KVH Industries. It trades about 0.26 of its potential returns per unit of risk. KVH Industries is currently generating about 0.16 per unit of risk. If you would invest  1,692  in Blue Owl Capital on September 1, 2024 and sell it today you would earn a total of  681.00  from holding Blue Owl Capital or generate 40.25% 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.  KVH Industries

Blue Owl Capital

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 20 (%) 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.

KVH Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KVH Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, KVH Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Owl and KVH Industries

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

The idea behind Blue Owl Capital and KVH Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.