Correlation Between Orchid Island and Oxford Lane
Can any of the company-specific risk be diversified away by investing in both Orchid Island 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 Orchid Island and Oxford Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orchid Island Capital and Oxford Lane Capital, you can compare the effects of market volatilities on Orchid Island 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 Orchid Island with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orchid Island and Oxford Lane.
Diversification Opportunities for Orchid Island and Oxford Lane
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orchid and Oxford is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Orchid Island 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 Orchid Island 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 Orchid Island 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 Orchid Island i.e., Orchid Island and Oxford Lane go up and down completely randomly.
Pair Corralation between Orchid Island and Oxford Lane
Considering the 90-day investment horizon Orchid Island is expected to generate 1.25 times less return on investment than Oxford Lane. In addition to that, Orchid Island is 1.66 times more volatile than Oxford Lane Capital. It trades about 0.04 of its total potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.09 per unit of volatility. If you would invest 419.00 in Oxford Lane Capital on November 9, 2024 and sell it today you would earn a total of 96.00 from holding Oxford Lane Capital or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orchid Island Capital vs. Oxford Lane Capital
Performance |
| Timeline |
| Orchid Island Capital |
| Oxford Lane Capital |
Orchid Island and Oxford Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orchid Island and Oxford Lane
The main advantage of trading using opposite Orchid Island and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orchid Island 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.| Orchid Island vs. AGNC Investment Corp | Orchid Island vs. Two Harbors Investments | Orchid Island vs. Invesco Mortgage Capital | Orchid Island vs. Chimera Investment |
| Oxford Lane vs. Capital Southwest | Oxford Lane vs. XAI Octagon Floating | Oxford Lane vs. Cornerstone Strategic Return | Oxford Lane vs. Cornerstone Strategic Value |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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