Correlation Between RiverNorthDoubleLine and Oxford Lane
Can any of the company-specific risk be diversified away by investing in both RiverNorthDoubleLine 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 RiverNorthDoubleLine and Oxford Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiverNorthDoubleLine Strategic Opportunity and Oxford Lane Capital, you can compare the effects of market volatilities on RiverNorthDoubleLine 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 RiverNorthDoubleLine with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorthDoubleLine and Oxford Lane.
Diversification Opportunities for RiverNorthDoubleLine and Oxford Lane
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RiverNorthDoubleLine and Oxford is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorthDoubleLine Strategic 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 RiverNorthDoubleLine 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 RiverNorthDoubleLine Strategic Opportunity 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 RiverNorthDoubleLine i.e., RiverNorthDoubleLine and Oxford Lane go up and down completely randomly.
Pair Corralation between RiverNorthDoubleLine and Oxford Lane
Considering the 90-day investment horizon RiverNorthDoubleLine Strategic Opportunity is expected to under-perform the Oxford Lane. But the etf apears to be less risky and, when comparing its historical volatility, RiverNorthDoubleLine Strategic Opportunity is 1.04 times less risky than Oxford Lane. The etf trades about -0.13 of its potential returns per unit of risk. The Oxford Lane Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 515.00 in Oxford Lane Capital on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Oxford Lane Capital or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RiverNorthDoubleLine Strategic vs. Oxford Lane Capital
Performance |
| Timeline |
| RiverNorthDoubleLine |
| Oxford Lane Capital |
RiverNorthDoubleLine and Oxford Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RiverNorthDoubleLine and Oxford Lane
The main advantage of trading using opposite RiverNorthDoubleLine and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorthDoubleLine 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 RiverNorthDoubleLine Strategic Opportunity 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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