Correlation Between Eagle Point and Oxford Lane

Can any of the company-specific risk be diversified away by investing in both Eagle Point 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 Eagle Point and Oxford Lane 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 Lane Capital, you can compare the effects of market volatilities on Eagle Point 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 Eagle Point with a short position of Oxford Lane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Oxford Lane.

Diversification Opportunities for Eagle Point and Oxford Lane

0.48

Correlation Coefficient

Eagle Point  Oxford Lane

Very weak diversification

The 3 months correlation between Eagle and Oxford is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit 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 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 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 Eagle Point i.e., Eagle Point and Oxford Lane go up and down completely randomly.

Pair Corralation between Eagle Point and Oxford Lane

Given the investment horizon of 90 days Eagle Point Credit is expected to generate 1.53 times more return on investment than Oxford Lane. However, Eagle Point is 1.53 times more volatile than Oxford Lane Capital. It trades about -0.01 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about -0.07 per unit of risk. If you would invest  2,417  in Eagle Point Credit on September 18, 2024 and sell it today you would lose (12.00) from holding Eagle Point Credit or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Eagle Point Credit  vs.  Oxford Lane Capital

Eagle Point Credit

Risk-Adjusted Performance

0 of 100

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 fairly stable fundamental indicators, Eagle Point is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oxford Lane Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Lane Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Oxford Lane is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eagle Point and Oxford Lane

The main advantage of trading using opposite Eagle Point and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point 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.

The idea behind Eagle Point Credit and Oxford Lane 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.