Correlation Between Western Acquisition and Blue Owl

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

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

Diversification Opportunities for Western Acquisition and Blue Owl

0.62

Correlation Coefficient

Western Acquisition  Blue Owl

Poor diversification

The 3 months correlation between Western and Blue is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures 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 Western Acquisition 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 Western Acquisition Ventures 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 Western Acquisition i.e., Western Acquisition and Blue Owl go up and down completely randomly.

Pair Corralation between Western Acquisition and Blue Owl

Given the investment horizon of 90 days Western Acquisition is expected to generate 4.36 times less return on investment than Blue Owl. In addition to that, Western Acquisition is 1.74 times more volatile than Blue Owl Capital. It trades about 0.01 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.07 per unit of volatility. If you would invest  1,343  in Blue Owl Capital on September 13, 2024 and sell it today you would earn a total of  198.00  from holding Blue Owl Capital or generate 14.74% return on investment over 90 days.

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

Western Acquisition Ventures  vs.  Blue Owl Capital

Western Acquisition

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Blue Owl Capital

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Blue Owl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Acquisition and Blue Owl

The main advantage of trading using opposite Western Acquisition and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Acquisition 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 Western Acquisition Ventures 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.