Correlation Between Oxford Lane and Morningstar Unconstrained

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

Diversification Opportunities for Oxford Lane and Morningstar Unconstrained

-0.44

Correlation Coefficient

Oxford Lane  Morningstar Unconstrained

Very good diversification

The 3 months correlation between Oxford and Morningstar is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Morningstar Unconstrained Allo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar Unconstrained 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 Morningstar Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar Unconstrained has no effect on the direction of Oxford Lane i.e., Oxford Lane and Morningstar Unconstrained go up and down completely randomly.

Pair Corralation between Oxford Lane and Morningstar Unconstrained

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 0.65 times more return on investment than Morningstar Unconstrained. However, Oxford Lane Capital is 1.53 times less risky than Morningstar Unconstrained. It trades about 0.07 of its potential returns per unit of risk. Morningstar Unconstrained Allocation is currently generating about 0.03 per unit of risk. If you would invest  2,040  in Oxford Lane Capital on October 9, 2024 and sell it today you would earn a total of  366.00  from holding Oxford Lane Capital or generate 17.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Oxford Lane Capital  vs.  Morningstar Unconstrained Allo

Oxford Lane Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 7 (%) 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.

Morningstar Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morningstar Unconstrained Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Oxford Lane and Morningstar Unconstrained

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

The idea behind Oxford Lane Capital and Morningstar Unconstrained Allocation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.