Correlation Between SLM Corp and Blue Owl

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

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

Diversification Opportunities for SLM Corp and Blue Owl

0.6

Correlation Coefficient

SLM Corp  Blue Owl

Poor diversification

The 3 months correlation between SLM and Blue is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp 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 SLM Corp 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 SLM Corp 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 SLM Corp i.e., SLM Corp and Blue Owl go up and down completely randomly.

Pair Corralation between SLM Corp and Blue Owl

Considering the 90-day investment horizon SLM Corp is expected to generate 1.62 times more return on investment than Blue Owl. However, SLM Corp is 1.62 times more volatile than Blue Owl Capital. It trades about 0.07 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.02 per unit of risk. If you would invest  2,801  in SLM Corp on December 25, 2024 and sell it today you would earn a total of  203.00  from holding SLM Corp or generate 7.25% return on investment over 90 days.

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

SLM Corp  vs.  Blue Owl Capital

SLM Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, SLM Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blue Owl Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 1 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SLM Corp and Blue Owl

The main advantage of trading using opposite SLM Corp and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp 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 SLM Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.