Correlation Between Oxford Lane and IA Financial

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

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

Diversification Opportunities for Oxford Lane and IA Financial

0.46

Correlation Coefficient

Oxford Lane  IA Financial

Very weak diversification

The 3 months correlation between Oxford and IAFNF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial and Oxford Lane 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 Oxford Lane Capital are associated (or correlated) with IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Oxford Lane i.e., Oxford Lane and IA Financial go up and down completely randomly.

Pair Corralation between Oxford Lane and IA Financial

Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the IA Financial. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Lane Capital is 1.09 times less risky than IA Financial. The stock trades about -0.02 of its potential returns per unit of risk. The iA Financial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,178  in iA Financial on December 29, 2024 and sell it today you would lose (233.00) from holding iA Financial or give up 2.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Oxford Lane Capital  vs.  iA Financial

Oxford Lane Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Lane Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Oxford Lane is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days iA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oxford Lane and IA Financial

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

The idea behind Oxford Lane Capital and iA Financial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.