Correlation Between Oxford Lane and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Oxford Lane and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Dow Jones.
Diversification Opportunities for Oxford Lane and Dow Jones
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oxford and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Oxford Lane i.e., Oxford Lane and Dow Jones go up and down completely randomly.
Pair Corralation between Oxford Lane and Dow Jones
Assuming the 90 days horizon Oxford Lane is expected to generate 9.69 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Oxford Lane Capital is 3.05 times less risky than Dow Jones. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oxford Lane Capital vs. Dow Jones Industrial
Performance |
| Timeline |
Oxford Lane and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Oxford Lane Capital
Pair trading matchups for Oxford Lane
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Oxford Lane and Dow Jones
The main advantage of trading using opposite Oxford Lane and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Oxford Lane vs. Oxford Lane Capital | Oxford Lane vs. Gladstone Commercial Corp | Oxford Lane vs. New York Mortgage | Oxford Lane vs. New York Mortgage |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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