Correlation Between CAP LEASE and Oxford Technology

Can any of the company-specific risk be diversified away by investing in both CAP LEASE and Oxford Technology 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 CAP LEASE and Oxford Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAP LEASE AVIATION and Oxford Technology 2, you can compare the effects of market volatilities on CAP LEASE and Oxford Technology 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 CAP LEASE with a short position of Oxford Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Oxford Technology.

Diversification Opportunities for CAP LEASE and Oxford Technology

0.14

Correlation Coefficient

CAP LEASE  Oxford Technology

Average diversification

The 3 months correlation between CAP and Oxford is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Oxford Technology 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Technology and CAP LEASE 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 CAP LEASE AVIATION are associated (or correlated) with Oxford Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Technology has no effect on the direction of CAP LEASE i.e., CAP LEASE and Oxford Technology go up and down completely randomly.

Pair Corralation between CAP LEASE and Oxford Technology

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Oxford Technology. In addition to that, CAP LEASE is 3.02 times more volatile than Oxford Technology 2. It trades about -0.04 of its total potential returns per unit of risk. Oxford Technology 2 is currently generating about -0.13 per unit of volatility. If you would invest  700.00  in Oxford Technology 2 on December 26, 2024 and sell it today you would lose (70.00) from holding Oxford Technology 2 or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CAP LEASE AVIATION  vs.  Oxford Technology 2

CAP LEASE AVIATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Oxford Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Technology 2 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CAP LEASE and Oxford Technology

The main advantage of trading using opposite CAP LEASE and Oxford Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE position performs unexpectedly, Oxford Technology 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 Technology will offset losses from the drop in Oxford Technology's long position.

The idea behind CAP LEASE AVIATION and Oxford Technology 2 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.