Correlation Between Algoma Steel and Blue Owl

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

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

Diversification Opportunities for Algoma Steel and Blue Owl

0.12

Correlation Coefficient

Algoma Steel  Blue Owl

Average diversification

The 3 months correlation between Algoma and Blue is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group 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 Algoma Steel 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 Algoma Steel Group 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 Algoma Steel i.e., Algoma Steel and Blue Owl go up and down completely randomly.

Pair Corralation between Algoma Steel and Blue Owl

Given the investment horizon of 90 days Algoma Steel Group is expected to under-perform the Blue Owl. In addition to that, Algoma Steel is 3.4 times more volatile than Blue Owl Capital. It trades about -0.23 of its total potential returns per unit of risk. Blue Owl Capital is currently generating about 0.32 per unit of volatility. If you would invest  1,476  in Blue Owl Capital on September 14, 2024 and sell it today you would earn a total of  47.00  from holding Blue Owl Capital or generate 3.18% return on investment over 90 days.

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

Algoma Steel Group  vs.  Blue Owl Capital

Algoma Steel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Algoma Steel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Algoma Steel is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Blue Owl Capital

Risk-Adjusted Performance

10 of 100

OK

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 conflicting fundamental indicators, Blue Owl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Algoma Steel and Blue Owl

The main advantage of trading using opposite Algoma Steel and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel 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 Algoma Steel Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.