Correlation Between SiteOne Landscape and Oxford Lane

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

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

Diversification Opportunities for SiteOne Landscape and Oxford Lane

0.06

Correlation Coefficient

SiteOne Landscape  Oxford Lane

Significant diversification

The 3 months correlation between SiteOne and Oxford is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply 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 SiteOne Landscape 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 SiteOne Landscape Supply 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 SiteOne Landscape i.e., SiteOne Landscape and Oxford Lane go up and down completely randomly.

Pair Corralation between SiteOne Landscape and Oxford Lane

Given the investment horizon of 90 days SiteOne Landscape Supply is expected to under-perform the Oxford Lane. In addition to that, SiteOne Landscape is 5.2 times more volatile than Oxford Lane Capital. It trades about -0.06 of its total potential returns per unit of risk. Oxford Lane Capital is currently generating about -0.09 per unit of volatility. If you would invest  2,407  in Oxford Lane Capital on September 22, 2024 and sell it today you would lose (57.00) from holding Oxford Lane Capital or give up 2.37% of portfolio value over 90 days.

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

SiteOne Landscape Supply  vs.  Oxford Lane Capital

SiteOne Landscape Supply

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SiteOne Landscape Supply has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Oxford Lane Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Lane Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Oxford Lane is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SiteOne Landscape and Oxford Lane

The main advantage of trading using opposite SiteOne Landscape and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiteOne Landscape 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 SiteOne Landscape Supply 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.