Correlation Between Dupont De and Oxford Lane

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

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

Diversification Opportunities for Dupont De and Oxford Lane

0.6

Correlation Coefficient

Dupont De  Oxford Lane

Poor diversification

The 3 months correlation between Dupont and Oxford is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours 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 Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Oxford Lane go up and down completely randomly.

Pair Corralation between Dupont De and Oxford Lane

Allowing for the 90-day total investment horizon Dupont De Nemours is expected to generate 3.78 times more return on investment than Oxford Lane. However, Dupont De is 3.78 times more volatile than Oxford Lane Capital. It trades about 0.04 of its potential returns per unit of risk. Oxford Lane Capital is currently generating about -0.06 per unit of risk. If you would invest  8,005  in Dupont De Nemours on September 12, 2024 and sell it today you would earn a total of  203.00  from holding Dupont De Nemours or generate 2.54% return on investment over 90 days.

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

Dupont De Nemours  vs.  Oxford Lane Capital

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the 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 Dupont De and Oxford Lane

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