Correlation Between TPG and Blue Owl

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

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

Diversification Opportunities for TPG and Blue Owl

0.5

Correlation Coefficient

TPG  Blue Owl

Very weak diversification

The 3 months correlation between TPG and Blue is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding TPG Inc 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 TPG 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 TPG Inc 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 TPG i.e., TPG and Blue Owl go up and down completely randomly.

Pair Corralation between TPG and Blue Owl

Considering the 90-day investment horizon TPG Inc is expected to under-perform the Blue Owl. But the stock apears to be less risky and, when comparing its historical volatility, TPG Inc is 1.19 times less risky than Blue Owl. The stock trades about -0.2 of its potential returns per unit of risk. The Blue Owl Capital is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,355  in Blue Owl Capital on November 28, 2024 and sell it today you would lose (229.00) from holding Blue Owl Capital or give up 9.72% of portfolio value over 90 days.

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

TPG Inc  vs.  Blue Owl Capital

TPG Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPG Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Blue Owl Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Owl Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with TPG and Blue Owl

The main advantage of trading using opposite TPG and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TPG 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 TPG Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.