Correlation Between Oaktree Capital and OFS Credit

Can any of the company-specific risk be diversified away by investing in both Oaktree Capital and OFS Credit 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 Oaktree Capital and OFS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Oaktree Capital and OFS Credit

-0.69

Correlation Coefficient

Oaktree Capital  OFS Credit

Excellent diversification

The 3 months correlation between Oaktree and OFS is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Capital Group and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit and Oaktree Capital 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 Oaktree Capital Group are associated (or correlated) with OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Oaktree Capital i.e., Oaktree Capital and OFS Credit go up and down completely randomly.

Pair Corralation between Oaktree Capital and OFS Credit

Assuming the 90 days trading horizon Oaktree Capital Group is expected to under-perform the OFS Credit. In addition to that, Oaktree Capital is 1.38 times more volatile than OFS Credit. It trades about -0.16 of its total potential returns per unit of risk. OFS Credit is currently generating about 0.03 per unit of volatility. If you would invest  2,453  in OFS Credit on September 23, 2024 and sell it today you would earn a total of  9.00  from holding OFS Credit or generate 0.37% return on investment over 90 days.

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

Oaktree Capital Group  vs.  OFS Credit

Oaktree Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

OFS Credit

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, OFS Credit is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oaktree Capital and OFS Credit

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

The idea behind Oaktree Capital Group and OFS Credit 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.