Correlation Between Ready Capital and Oxford Lane

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

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

Diversification Opportunities for Ready Capital and Oxford Lane

-0.63

Correlation Coefficient

Ready Capital  Oxford Lane

Excellent diversification

The 3 months correlation between Ready and Oxford is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ready Capital Corp and Oxford Lane Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Lane Capital and Ready Capital 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 Ready Capital Corp are associated (or correlated) with Oxford Lane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Lane Capital has no effect on the direction of Ready Capital i.e., Ready Capital and Oxford Lane go up and down completely randomly.

Pair Corralation between Ready Capital and Oxford Lane

Allowing for the 90-day total investment horizon Ready Capital Corp is expected to generate 8.95 times more return on investment than Oxford Lane. However, Ready Capital is 8.95 times more volatile than Oxford Lane Capital. It trades about 0.23 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.24 per unit of risk. If you would invest  685.00  in Ready Capital Corp on September 1, 2024 and sell it today you would earn a total of  52.00  from holding Ready Capital Corp or generate 7.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ready Capital Corp  vs.  Oxford Lane Capital

Ready Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oxford Lane Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Oxford Lane is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ready Capital and Oxford Lane

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

The idea behind Ready Capital Corp and Oxford Lane Capital 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.