Correlation Between T Rowe and Oxford Lane

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

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

Diversification Opportunities for T Rowe and Oxford Lane

0.44

Correlation Coefficient

T Rowe  Oxford Lane

Very weak diversification

The 3 months correlation between RRTLX and Oxford is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Oxford Lane go up and down completely randomly.

Pair Corralation between T Rowe and Oxford Lane

Assuming the 90 days horizon T Rowe is expected to generate 1.63 times less return on investment than Oxford Lane. In addition to that, T Rowe is 1.5 times more volatile than Oxford Lane Capital. It trades about 0.07 of its total potential returns per unit of risk. Oxford Lane Capital is currently generating about 0.18 per unit of volatility. If you would invest  2,352  in Oxford Lane Capital on December 20, 2024 and sell it today you would earn a total of  62.00  from holding Oxford Lane Capital or generate 2.64% return on investment over 90 days.

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

T Rowe Price  vs.  Oxford Lane Capital

T Rowe Price

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with T Rowe and Oxford Lane

The main advantage of trading using opposite T Rowe and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..