Correlation Between Oxford Lane and Western Asset
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on Oxford Lane and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Western Asset.
Diversification Opportunities for Oxford Lane and Western Asset
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oxford and Western is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Oxford Lane i.e., Oxford Lane and Western Asset go up and down completely randomly.
Pair Corralation between Oxford Lane and Western Asset
Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the Western Asset. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Lane Capital is 1.28 times less risky than Western Asset. The stock trades about -0.15 of its potential returns per unit of risk. The Western Asset High is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 439.00 in Western Asset High on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Western Asset High or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oxford Lane Capital vs. Western Asset High
Performance |
| Timeline |
| Oxford Lane Capital |
| Western Asset High |
Oxford Lane and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and Western Asset
The main advantage of trading using opposite Oxford Lane and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Oxford Lane Capital | Western Asset vs. Orchid Island Capital | Western Asset vs. Guggenheim Strategic Opportunities | Western Asset vs. Stone Harbor Emerging |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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