Correlation Between Oxford Lane and Putnam High
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Putnam High 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 Putnam High 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 Putnam High Income, you can compare the effects of market volatilities on Oxford Lane and Putnam High 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 Putnam High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Putnam High.
Diversification Opportunities for Oxford Lane and Putnam High
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oxford and Putnam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Putnam High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam High Income 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 Putnam High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam High Income has no effect on the direction of Oxford Lane i.e., Oxford Lane and Putnam High go up and down completely randomly.
Pair Corralation between Oxford Lane and Putnam High
Given the investment horizon of 90 days Oxford Lane is expected to generate 1.31 times less return on investment than Putnam High. In addition to that, Oxford Lane is 1.42 times more volatile than Putnam High Income. It trades about 0.1 of its total potential returns per unit of risk. Putnam High Income is currently generating about 0.18 per unit of volatility. If you would invest 660.00 in Putnam High Income on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Putnam High Income or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oxford Lane Capital vs. Putnam High Income
Performance |
| Timeline |
| Oxford Lane Capital |
| Putnam High Income |
Oxford Lane and Putnam High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and Putnam High
The main advantage of trading using opposite Oxford Lane and Putnam High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, Putnam High 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 Putnam High will offset losses from the drop in Putnam High'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 |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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