Correlation Between OFS Credit and Equus Total

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

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

Diversification Opportunities for OFS Credit and Equus Total

-0.61

Correlation Coefficient

OFS Credit  Equus Total

Excellent diversification

The 3 months correlation between OFS and Equus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit and Equus Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equus Total Return and OFS Credit 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 OFS Credit are associated (or correlated) with Equus Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equus Total Return has no effect on the direction of OFS Credit i.e., OFS Credit and Equus Total go up and down completely randomly.

Pair Corralation between OFS Credit and Equus Total

Assuming the 90 days horizon OFS Credit is expected to generate 0.15 times more return on investment than Equus Total. However, OFS Credit is 6.51 times less risky than Equus Total. It trades about 0.11 of its potential returns per unit of risk. Equus Total Return is currently generating about -0.04 per unit of risk. If you would invest  2,404  in OFS Credit on August 30, 2024 and sell it today you would earn a total of  74.00  from holding OFS Credit or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

OFS Credit  vs.  Equus Total Return

OFS Credit

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OFS Credit are ranked lower than 8 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Equus Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equus Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with OFS Credit and Equus Total

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

The idea behind OFS Credit and Equus Total Return 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.