Correlation Between Oxford Industries and Lakeland Industries

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

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

Diversification Opportunities for Oxford Industries and Lakeland Industries

0.81

Correlation Coefficient

Oxford Industries  Lakeland Industries

Very poor diversification

The 3 months correlation between Oxford and Lakeland is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Industries and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries and Oxford Industries 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 Industries are associated (or correlated) with Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of Oxford Industries i.e., Oxford Industries and Lakeland Industries go up and down completely randomly.

Pair Corralation between Oxford Industries and Lakeland Industries

Considering the 90-day investment horizon Oxford Industries is expected to under-perform the Lakeland Industries. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Industries is 1.15 times less risky than Lakeland Industries. The stock trades about -0.13 of its potential returns per unit of risk. The Lakeland Industries is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,547  in Lakeland Industries on December 29, 2024 and sell it today you would lose (521.00) from holding Lakeland Industries or give up 20.46% of portfolio value over 90 days.

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

Oxford Industries  vs.  Lakeland Industries

Oxford Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lakeland Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lakeland Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Oxford Industries and Lakeland Industries

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

The idea behind Oxford Industries and Lakeland Industries 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.