Correlation Between Eagle Point and Oxford Square

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

By analyzing existing cross correlation between Eagle Point Credit and Oxford Square Capital, you can compare the effects of market volatilities on Eagle Point and Oxford Square 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 Eagle Point with a short position of Oxford Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Oxford Square.

Diversification Opportunities for Eagle Point and Oxford Square

0.19

Correlation Coefficient

Eagle Point  Oxford Square

Average diversification

The 3 months correlation between Eagle and Oxford is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Oxford Square Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Square Capital and Eagle Point 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 Eagle Point Credit are associated (or correlated) with Oxford Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Square Capital has no effect on the direction of Eagle Point i.e., Eagle Point and Oxford Square go up and down completely randomly.

Pair Corralation between Eagle Point and Oxford Square

Considering the 90-day investment horizon Eagle Point is expected to generate 2.41 times less return on investment than Oxford Square. But when comparing it to its historical volatility, Eagle Point Credit is 1.17 times less risky than Oxford Square. It trades about 0.14 of its potential returns per unit of risk. Oxford Square Capital is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Oxford Square Capital on December 5, 2024 and sell it today you would earn a total of  14.00  from holding Oxford Square Capital or generate 5.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Eagle Point Credit  vs.  Oxford Square Capital

Eagle Point Credit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Point Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Eagle Point is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Oxford Square Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Oxford Square may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eagle Point and Oxford Square

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

The idea behind Eagle Point Credit and Oxford Square Capital 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.