Correlation Between RiverNorth Specialty and Oxford Lane
Can any of the company-specific risk be diversified away by investing in both RiverNorth Specialty and Oxford Lane 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 RiverNorth Specialty and Oxford Lane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RiverNorth Specialty Finance and Oxford Lane Capital, you can compare the effects of market volatilities on RiverNorth Specialty and Oxford Lane 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 RiverNorth Specialty with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of RiverNorth Specialty and Oxford Lane.
Diversification Opportunities for RiverNorth Specialty and Oxford Lane
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RiverNorth and Oxford is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding RiverNorth Specialty Finance and Oxford Lane Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Lane Capital and RiverNorth Specialty 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 RiverNorth Specialty Finance are associated (or correlated) with Oxford Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Lane Capital has no effect on the direction of RiverNorth Specialty i.e., RiverNorth Specialty and Oxford Lane go up and down completely randomly.
Pair Corralation between RiverNorth Specialty and Oxford Lane
Assuming the 90 days trading horizon RiverNorth Specialty is expected to generate 5.26 times less return on investment than Oxford Lane. But when comparing it to its historical volatility, RiverNorth Specialty Finance is 14.82 times less risky than Oxford Lane. It trades about 0.5 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,381 in Oxford Lane Capital on August 28, 2024 and sell it today you would earn a total of 26.00 from holding Oxford Lane Capital or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 19.05% |
| Values | Daily Returns |
RiverNorth Specialty Finance vs. Oxford Lane Capital
Performance |
| Timeline |
| RiverNorth Specialty |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
| Oxford Lane Capital |
RiverNorth Specialty and Oxford Lane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RiverNorth Specialty and Oxford Lane
The main advantage of trading using opposite RiverNorth Specialty and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverNorth Specialty position performs unexpectedly, Oxford Lane 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 Oxford Lane will offset losses from the drop in Oxford Lane's long position.| RiverNorth Specialty vs. GAMCO Natural Resources | RiverNorth Specialty vs. The Gabelli Multimedia | RiverNorth Specialty vs. Customers Bancorp | RiverNorth Specialty vs. SCE Trust II |
| Oxford Lane vs. The Gabelli Multimedia | Oxford Lane vs. The Gabelli Multimedia | Oxford Lane vs. The Gabelli Dividend | Oxford Lane vs. The Gabelli Equity |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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