Correlation Between Oxford Lane and Ellsworth Growth

Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Ellsworth Growth 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 Ellsworth Growth 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 Ellsworth Growth and, you can compare the effects of market volatilities on Oxford Lane and Ellsworth Growth 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 Ellsworth Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Ellsworth Growth.

Diversification Opportunities for Oxford Lane and Ellsworth Growth

-0.53

Correlation Coefficient

Oxford Lane  Ellsworth Growth

Excellent diversification

The 3 months correlation between Oxford and Ellsworth is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Ellsworth Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Growth 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 Ellsworth Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Growth has no effect on the direction of Oxford Lane i.e., Oxford Lane and Ellsworth Growth go up and down completely randomly.

Pair Corralation between Oxford Lane and Ellsworth Growth

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 0.16 times more return on investment than Ellsworth Growth. However, Oxford Lane Capital is 6.38 times less risky than Ellsworth Growth. It trades about 0.18 of its potential returns per unit of risk. Ellsworth Growth and is currently generating about -0.1 per unit of risk. If you would invest  2,370  in Oxford Lane Capital on November 28, 2024 and sell it today you would earn a total of  49.00  from holding Oxford Lane Capital or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Oxford Lane Capital  vs.  Ellsworth Growth and

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 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Oxford Lane is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Ellsworth Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Oxford Lane and Ellsworth Growth

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

The idea behind Oxford Lane Capital and Ellsworth Growth and 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.