Correlation Between Oxford Lane and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Diamond Hill 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 Oxford Lane and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oxford Lane Capital and Diamond Hill Investment, you can compare the effects of market volatilities on Oxford Lane and Diamond Hill 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 Oxford Lane with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Diamond Hill.
Diversification Opportunities for Oxford Lane and Diamond Hill
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oxford and Diamond is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Oxford Lane 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 Oxford Lane Capital are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Oxford Lane i.e., Oxford Lane and Diamond Hill go up and down completely randomly.
Pair Corralation between Oxford Lane and Diamond Hill
Given the investment horizon of 90 days Oxford Lane Capital is expected to generate 0.37 times more return on investment than Diamond Hill. However, Oxford Lane Capital is 2.67 times less risky than Diamond Hill. It trades about 0.05 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.01 per unit of risk. If you would invest 500.00 in Oxford Lane Capital on November 1, 2024 and sell it today you would earn a total of 9.00 from holding Oxford Lane Capital or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oxford Lane Capital vs. Diamond Hill Investment
Performance |
| Timeline |
| Oxford Lane Capital |
| Diamond Hill Investment |
Oxford Lane and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and Diamond Hill
The main advantage of trading using opposite Oxford Lane and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Oxford Lane vs. Capital Southwest | Oxford Lane vs. XAI Octagon Floating | Oxford Lane vs. Cornerstone Strategic Return | Oxford Lane vs. Cornerstone Strategic Value |
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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