Correlation Between Gladstone Investment and Oxford Lane

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

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

Diversification Opportunities for Gladstone Investment and Oxford Lane

-0.16

Correlation Coefficient

Gladstone Investment  Oxford Lane

Good diversification

The 3 months correlation between Gladstone and Oxford is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Oxford Lane go up and down completely randomly.

Pair Corralation between Gladstone Investment and Oxford Lane

Assuming the 90 days horizon Gladstone Investment is expected to generate 0.36 times more return on investment than Oxford Lane. However, Gladstone Investment is 2.8 times less risky than Oxford Lane. It trades about 0.21 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.0 per unit of risk. If you would invest  2,445  in Gladstone Investment on September 20, 2024 and sell it today you would earn a total of  23.00  from holding Gladstone Investment or generate 0.94% return on investment over 90 days.

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

Gladstone Investment  vs.  Oxford Lane Capital

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gladstone Investment and Oxford Lane

The main advantage of trading using opposite Gladstone Investment and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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 Gladstone Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.