Correlation Between Oakley Capital and Schroders Investment

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

By analyzing existing cross correlation between Oakley Capital Investments and Schroders Investment Trusts, you can compare the effects of market volatilities on Oakley Capital and Schroders Investment 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 Oakley Capital with a short position of Schroders Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakley Capital and Schroders Investment.

Diversification Opportunities for Oakley Capital and Schroders Investment

-0.38

Correlation Coefficient

Oakley Capital  Schroders Investment

Very good diversification

The 3 months correlation between Oakley and Schroders is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments and Schroders Investment Trusts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroders Investment and Oakley 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 Oakley Capital Investments are associated (or correlated) with Schroders Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroders Investment has no effect on the direction of Oakley Capital i.e., Oakley Capital and Schroders Investment go up and down completely randomly.

Pair Corralation between Oakley Capital and Schroders Investment

Assuming the 90 days trading horizon Oakley Capital Investments is expected to under-perform the Schroders Investment. But the stock apears to be less risky and, when comparing its historical volatility, Oakley Capital Investments is 1.1 times less risky than Schroders Investment. The stock trades about -0.15 of its potential returns per unit of risk. The Schroders Investment Trusts is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  46,000  in Schroders Investment Trusts on August 31, 2024 and sell it today you would earn a total of  1,500  from holding Schroders Investment Trusts or generate 3.26% return on investment over 90 days.

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

Oakley Capital Investments  vs.  Schroders Investment Trusts

Oakley Capital Inves

Risk-Adjusted Performance

0 of 100

Very Weak

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

Schroders Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schroders Investment Trusts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Schroders Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Oakley Capital and Schroders Investment

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

The idea behind Oakley Capital Investments and Schroders Investment Trusts 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.