Correlation Between Oxford Lane and New America
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and New America 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 New America 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 New America High, you can compare the effects of market volatilities on Oxford Lane and New America 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 New America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and New America.
Diversification Opportunities for Oxford Lane and New America
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oxford and New is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and New America High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New America 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 New America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New America High has no effect on the direction of Oxford Lane i.e., Oxford Lane and New America go up and down completely randomly.
Pair Corralation between Oxford Lane and New America
Assuming the 90 days horizon Oxford Lane is expected to generate 2.32 times less return on investment than New America. But when comparing it to its historical volatility, Oxford Lane Capital is 1.61 times less risky than New America. It trades about 0.09 of its potential returns per unit of risk. New America High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 691.00 in New America High on November 3, 2024 and sell it today you would earn a total of 137.00 from holding New America High or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Oxford Lane Capital vs. New America High
Performance |
| Timeline |
| Oxford Lane Capital |
| New America High |
Oxford Lane and New America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and New America
The main advantage of trading using opposite Oxford Lane and New America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, New America 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 New America will offset losses from the drop in New America's long position.| Oxford Lane vs. Oxford Lane Capital | Oxford Lane vs. Oxford Lane Capital | Oxford Lane vs. The Gabelli Multimedia | Oxford Lane vs. The Gabelli Equity |
| New America vs. Pioneer Municipal High | New America vs. DWS Municipal Income | New America vs. RiverNorth Specialty Finance | New America vs. Putnam Managed Municipal |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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