Correlation Between Oxford Lane and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and DWS Municipal 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 DWS Municipal 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 DWS Municipal Income, you can compare the effects of market volatilities on Oxford Lane and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and DWS Municipal.
Diversification Opportunities for Oxford Lane and DWS Municipal
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oxford and DWS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal 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 DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Oxford Lane i.e., Oxford Lane and DWS Municipal go up and down completely randomly.
Pair Corralation between Oxford Lane and DWS Municipal
Assuming the 90 days horizon Oxford Lane Capital is expected to generate 2.16 times more return on investment than DWS Municipal. However, Oxford Lane is 2.16 times more volatile than DWS Municipal Income. It trades about 0.04 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.07 per unit of risk. If you would invest 1,844 in Oxford Lane Capital on August 28, 2024 and sell it today you would earn a total of 436.00 from holding Oxford Lane Capital or generate 23.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.53% |
| Values | Daily Returns |
Oxford Lane Capital vs. DWS Municipal Income
Performance |
| Timeline |
| Oxford Lane Capital |
| DWS Municipal Income |
Oxford Lane and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and DWS Municipal
The main advantage of trading using opposite Oxford Lane and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal'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 |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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