Correlation Between Aurora Innovation and Oxford Lane
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Oxford Lane 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 Aurora Innovation and Oxford Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Oxford Lane Capital, you can compare the effects of market volatilities on Aurora Innovation and Oxford Lane 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 Aurora Innovation with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Oxford Lane.
Diversification Opportunities for Aurora Innovation and Oxford Lane
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and Oxford is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Oxford Lane Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Lane Capital and Aurora Innovation 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 Aurora Innovation are associated (or correlated) with Oxford Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Lane Capital has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Oxford Lane go up and down completely randomly.
Pair Corralation between Aurora Innovation and Oxford Lane
Assuming the 90 days horizon Aurora Innovation is expected to generate 23.53 times more return on investment than Oxford Lane. However, Aurora Innovation is 23.53 times more volatile than Oxford Lane Capital. It trades about 0.1 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.08 per unit of risk. If you would invest 106.00 in Aurora Innovation on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Aurora Innovation or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Oxford Lane Capital
Performance |
| Timeline |
| Aurora Innovation |
| Oxford Lane Capital |
Aurora Innovation and Oxford Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Oxford Lane
The main advantage of trading using opposite Aurora Innovation and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Oxford Lane 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 Oxford Lane will offset losses from the drop in Oxford Lane's long position.The idea behind Aurora Innovation and Oxford Lane 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.| Oxford Lane vs. HUMANA INC | Oxford Lane vs. SCOR PK | Oxford Lane vs. Aquagold International | Oxford Lane vs. Thrivent High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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