Correlation Between OFS Credit and AMODW
Can any of the company-specific risk be diversified away by investing in both OFS Credit and AMODW 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 OFS Credit and AMODW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Credit and AMODW, you can compare the effects of market volatilities on OFS Credit and AMODW 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 OFS Credit with a short position of AMODW. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Credit and AMODW.
Diversification Opportunities for OFS Credit and AMODW
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OFS and AMODW is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit and AMODW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMODW and OFS Credit 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 OFS Credit are associated (or correlated) with AMODW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMODW has no effect on the direction of OFS Credit i.e., OFS Credit and AMODW go up and down completely randomly.
Pair Corralation between OFS Credit and AMODW
Assuming the 90 days horizon OFS Credit is expected to generate 243.19 times less return on investment than AMODW. But when comparing it to its historical volatility, OFS Credit is 67.45 times less risky than AMODW. It trades about 0.03 of its potential returns per unit of risk. AMODW is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.60 in AMODW on November 1, 2024 and sell it today you would earn a total of 0.39 from holding AMODW or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 49.15% |
| Values | Daily Returns |
OFS Credit vs. AMODW
Performance |
| Timeline |
| OFS Credit |
| AMODW |
OFS Credit and AMODW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Credit and AMODW
The main advantage of trading using opposite OFS Credit and AMODW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit position performs unexpectedly, AMODW 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 AMODW will offset losses from the drop in AMODW's long position.| OFS Credit vs. Oxford Lane Capital | OFS Credit vs. Gladstone Land Corp | OFS Credit vs. Eagle Point Income |
| AMODW vs. Prospect Capital | AMODW vs. GCM Grosvenor | AMODW vs. Vinci Partners Investments | AMODW vs. State Street |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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