Correlation Between CVR Energy and Oxford Lane

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

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

Diversification Opportunities for CVR Energy and Oxford Lane

-0.51

Correlation Coefficient

CVR Energy  Oxford Lane

Excellent diversification

The 3 months correlation between CVR and Oxford is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy 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 CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Oxford Lane go up and down completely randomly.

Pair Corralation between CVR Energy and Oxford Lane

Considering the 90-day investment horizon CVR Energy is expected to under-perform the Oxford Lane. In addition to that, CVR Energy is 15.43 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  2,334  in Oxford Lane Capital on September 3, 2024 and sell it today you would earn a total of  75.00  from holding Oxford Lane Capital or generate 3.21% return on investment over 90 days.

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

CVR Energy  vs.  Oxford Lane Capital

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Oxford Lane Capital

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 13 (%) 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 CVR Energy and Oxford Lane

The main advantage of trading using opposite CVR Energy and Oxford Lane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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 CVR Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.