Correlation Between Owl Rock and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Owl Rock and Sixth Street 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 Owl Rock and Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Owl Rock Capital and Sixth Street Specialty, you can compare the effects of market volatilities on Owl Rock and Sixth Street 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 Owl Rock with a short position of Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owl Rock and Sixth Street.
Diversification Opportunities for Owl Rock and Sixth Street
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Owl and Sixth is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Owl Rock Capital and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty and Owl Rock 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 Owl Rock Capital are associated (or correlated) with Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Owl Rock i.e., Owl Rock and Sixth Street go up and down completely randomly.
Pair Corralation between Owl Rock and Sixth Street
Given the investment horizon of 90 days Owl Rock Capital is expected to generate 1.41 times more return on investment than Sixth Street. However, Owl Rock is 1.41 times more volatile than Sixth Street Specialty. It trades about 0.06 of its potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.08 per unit of risk. If you would invest 1,244 in Owl Rock Capital on November 1, 2024 and sell it today you would earn a total of 104.00 from holding Owl Rock Capital or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 20.28% |
| Values | Daily Returns |
Owl Rock Capital vs. Sixth Street Specialty
Performance |
| Timeline |
| Owl Rock Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Sixth Street Specialty |
Owl Rock and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Owl Rock and Sixth Street
The main advantage of trading using opposite Owl Rock and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owl Rock position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.| Owl Rock vs. Barings BDC | Owl Rock vs. Runway Growth Finance | Owl Rock vs. OneMain Holdings | Owl Rock vs. Navient Corp |
| Sixth Street vs. New Mountain Finance | Sixth Street vs. Carlyle Secured Lending | Sixth Street vs. BlackRock TCP Capital | Sixth Street vs. Fidus Investment Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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