Correlation Between Main Street and Oxford Square

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

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

Diversification Opportunities for Main Street and Oxford Square

0.43

Correlation Coefficient

Main Street  Oxford Square

Very weak diversification

The 3 months correlation between Main and Oxford is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital 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 Main Street 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 Main Street Capital 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 Main Street i.e., Main Street and Oxford Square go up and down completely randomly.

Pair Corralation between Main Street and Oxford Square

Given the investment horizon of 90 days Main Street is expected to generate 5.26 times less return on investment than Oxford Square. In addition to that, Main Street is 1.21 times more volatile than Oxford Square Capital. It trades about 0.02 of its total potential returns per unit of risk. Oxford Square Capital is currently generating about 0.12 per unit of volatility. If you would invest  237.00  in Oxford Square Capital on December 27, 2024 and sell it today you would earn a total of  20.00  from holding Oxford Square Capital or generate 8.44% return on investment over 90 days.

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

Main Street Capital  vs.  Oxford Square Capital

Main Street Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Main Street is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Oxford Square Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 9 (%) 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 Main Street and Oxford Square

The main advantage of trading using opposite Main Street and Oxford Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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 Main Street Capital 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 Stocks Directory module to find actively traded stocks across global markets.