Correlation Between Pure Cycle and Blue Owl

Can any of the company-specific risk be diversified away by investing in both Pure Cycle and Blue Owl 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 Pure Cycle and Blue Owl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pure Cycle and Blue Owl Capital, you can compare the effects of market volatilities on Pure Cycle and Blue Owl 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 Pure Cycle with a short position of Blue Owl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Cycle and Blue Owl.

Diversification Opportunities for Pure Cycle and Blue Owl

0.43

Correlation Coefficient

Pure Cycle  Blue Owl

Very weak diversification

The 3 months correlation between Pure and Blue is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pure Cycle and Blue Owl Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Owl Capital and Pure Cycle 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 Pure Cycle are associated (or correlated) with Blue Owl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Owl Capital has no effect on the direction of Pure Cycle i.e., Pure Cycle and Blue Owl go up and down completely randomly.

Pair Corralation between Pure Cycle and Blue Owl

Given the investment horizon of 90 days Pure Cycle is expected to under-perform the Blue Owl. In addition to that, Pure Cycle is 2.99 times more volatile than Blue Owl Capital. It trades about -0.23 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about -0.1 per unit of volatility. If you would invest  1,504  in Blue Owl Capital on October 11, 2024 and sell it today you would lose (28.00) from holding Blue Owl Capital or give up 1.86% of portfolio value over 90 days.

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

Pure Cycle  vs.  Blue Owl Capital

Pure Cycle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Pure Cycle displayed solid returns over the last few months and may actually be approaching a breakup point.

Blue Owl Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Blue Owl is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pure Cycle and Blue Owl

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

The idea behind Pure Cycle and Blue Owl Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.