Correlation Between Medical Properties and Oxford Lane

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

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

Diversification Opportunities for Medical Properties and Oxford Lane

0.86

Correlation Coefficient

Medical Properties  Oxford Lane

Very poor diversification

The 3 months correlation between Medical and Oxford is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust 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 Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and Oxford Lane go up and down completely randomly.

Pair Corralation between Medical Properties and Oxford Lane

Considering the 90-day investment horizon Medical Properties Trust is expected to generate 13.04 times more return on investment than Oxford Lane. However, Medical Properties is 13.04 times more volatile than Oxford Lane Capital. It trades about 0.24 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.17 per unit of risk. If you would invest  381.00  in Medical Properties Trust on December 20, 2024 and sell it today you would earn a total of  217.00  from holding Medical Properties Trust or generate 56.96% return on investment over 90 days.

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

Medical Properties Trust  vs.  Oxford Lane Capital

Medical Properties Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Properties Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Medical Properties showed solid returns over the last few months and may actually be approaching a breakup point.

Oxford Lane Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Oxford Lane is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Medical Properties and Oxford Lane

The main advantage of trading using opposite Medical Properties and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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 Medical Properties Trust 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 Transaction History module to view history of all your transactions and understand their impact on performance.