Correlation Between Oxford Square and RiverNorth Specialty
Can any of the company-specific risk be diversified away by investing in both Oxford Square and RiverNorth Specialty 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 Square and RiverNorth Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oxford Square Capital and RiverNorth Specialty Finance, you can compare the effects of market volatilities on Oxford Square and RiverNorth Specialty 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 Square with a short position of RiverNorth Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Square and RiverNorth Specialty.
Diversification Opportunities for Oxford Square and RiverNorth Specialty
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oxford and RiverNorth is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Square Capital and RiverNorth Specialty Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RiverNorth Specialty and Oxford Square 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 Square Capital are associated (or correlated) with RiverNorth Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RiverNorth Specialty has no effect on the direction of Oxford Square i.e., Oxford Square and RiverNorth Specialty go up and down completely randomly.
Pair Corralation between Oxford Square and RiverNorth Specialty
Assuming the 90 days horizon Oxford Square Capital is expected to generate 0.71 times more return on investment than RiverNorth Specialty. However, Oxford Square Capital is 1.4 times less risky than RiverNorth Specialty. It trades about 0.25 of its potential returns per unit of risk. RiverNorth Specialty Finance is currently generating about 0.12 per unit of risk. If you would invest 2,446 in Oxford Square Capital on September 4, 2024 and sell it today you would earn a total of 29.00 from holding Oxford Square Capital or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Oxford Square Capital vs. RiverNorth Specialty Finance
Performance |
| Timeline |
| Oxford Square Capital |
| RiverNorth Specialty |
Oxford Square and RiverNorth Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Square and RiverNorth Specialty
The main advantage of trading using opposite Oxford Square and RiverNorth Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Square position performs unexpectedly, RiverNorth Specialty 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 RiverNorth Specialty will offset losses from the drop in RiverNorth Specialty's long position.| Oxford Square vs. Navient SR | Oxford Square vs. First Internet Bancorp | Oxford Square vs. Small Cap Premium | Oxford Square vs. Stifel Financial |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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