Correlation Between Great Elm and Oxford Lane
Can any of the company-specific risk be diversified away by investing in both Great Elm 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 Great Elm and Oxford Lane 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 Oxford Lane Capital, you can compare the effects of market volatilities on Great Elm 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 Great Elm with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Oxford Lane.
Diversification Opportunities for Great Elm and Oxford Lane
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Oxford is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital 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 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 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 Great Elm i.e., Great Elm and Oxford Lane go up and down completely randomly.
Pair Corralation between Great Elm and Oxford Lane
Assuming the 90 days horizon Great Elm Capital is expected to generate 3.77 times more return on investment than Oxford Lane. However, Great Elm is 3.77 times more volatile than Oxford Lane Capital. It trades about 0.04 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.11 per unit of risk. If you would invest 2,174 in Great Elm Capital on August 30, 2024 and sell it today you would earn a total of 329.00 from holding Great Elm Capital or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.72% |
| Values | Daily Returns |
Great Elm Capital vs. Oxford Lane Capital
Performance |
| Timeline |
| Great Elm Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Oxford Lane Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Great Elm and Oxford Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Oxford Lane
The main advantage of trading using opposite Great Elm and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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 Great Elm Capital 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. The Gabelli Multimedia | Oxford Lane vs. The Gabelli Equity | Oxford Lane vs. Virtus AllianzGI Convertible | Oxford Lane vs. The Gabelli Equity |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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