Correlation Between Blue Owl and Merck
Can any of the company-specific risk be diversified away by investing in both Blue Owl and Merck 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 Blue Owl and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Owl Capital and Merck Company, you can compare the effects of market volatilities on Blue Owl and Merck 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 Blue Owl with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Owl and Merck.
Diversification Opportunities for Blue Owl and Merck
Good diversification
The 3 months correlation between Blue and Merck is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blue Owl Capital and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Blue Owl 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 Blue Owl Capital are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Blue Owl i.e., Blue Owl and Merck go up and down completely randomly.
Pair Corralation between Blue Owl and Merck
Considering the 90-day investment horizon Blue Owl Capital is expected to generate 0.99 times more return on investment than Merck. However, Blue Owl Capital is 1.01 times less risky than Merck. It trades about -0.02 of its potential returns per unit of risk. Merck Company is currently generating about -0.23 per unit of risk. If you would invest 2,432 in Blue Owl Capital on November 22, 2024 and sell it today you would lose (33.00) from holding Blue Owl Capital or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Owl Capital vs. Merck Company
Performance |
| Timeline |
| Blue Owl Capital |
| Merck Company |
Blue Owl and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Owl and Merck
The main advantage of trading using opposite Blue Owl and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Owl position performs unexpectedly, Merck 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 Merck will offset losses from the drop in Merck's long position.| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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