Correlation Between Great Elm and Blue Owl
Can any of the company-specific risk be diversified away by investing in both Great Elm 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 Great Elm and Blue Owl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Capital and Blue Owl Capital, you can compare the effects of market volatilities on Great Elm 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 Great Elm with a short position of Blue Owl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Blue Owl.
Diversification Opportunities for Great Elm and Blue Owl
Very weak diversification
The 3 months correlation between Great and Blue is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital 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 Great Elm 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 Great Elm Capital 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 Great Elm i.e., Great Elm and Blue Owl go up and down completely randomly.
Pair Corralation between Great Elm and Blue Owl
Given the investment horizon of 90 days Great Elm is expected to generate 1.15 times less return on investment than Blue Owl. But when comparing it to its historical volatility, Great Elm Capital is 1.58 times less risky than Blue Owl. It trades about 0.1 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,290 in Blue Owl Capital on November 8, 2024 and sell it today you would earn a total of 187.00 from holding Blue Owl Capital or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Capital vs. Blue Owl Capital
Performance |
| Timeline |
| Great Elm Capital |
| Blue Owl Capital |
Great Elm and Blue Owl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Blue Owl
The main advantage of trading using opposite Great Elm and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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.| Great Elm vs. John Hancock Investors | Great Elm vs. MFS Charter Income | Great Elm vs. GCM Grosvenor | Great Elm vs. BlackRock ESG Capital |
| Blue Owl vs. Apollo Global Management | Blue Owl vs. KKR Co LP | Blue Owl vs. Affiliated Managers Group | Blue Owl vs. Ares Capital |
Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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