Correlation Between Oxford Lane and Federated Premier

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

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

Diversification Opportunities for Oxford Lane and Federated Premier

-0.84

Correlation Coefficient

Oxford Lane  Federated Premier

Pay attention - limited upside

The 3 months correlation between Oxford and Federated is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Oxford Lane 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 Oxford Lane Capital are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Oxford Lane i.e., Oxford Lane and Federated Premier go up and down completely randomly.

Pair Corralation between Oxford Lane and Federated Premier

Given the investment horizon of 90 days Oxford Lane Capital is expected to generate 0.84 times more return on investment than Federated Premier. However, Oxford Lane Capital is 1.18 times less risky than Federated Premier. It trades about 0.11 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.17 per unit of risk. If you would invest  506.00  in Oxford Lane Capital on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Oxford Lane Capital or generate 3.75% return on investment over 90 days.

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

Oxford Lane Capital  vs.  Federated Premier Municipal

Oxford Lane Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Oxford Lane is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Federated Premier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest inconsistent performance, the Fund's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Pair Trading with Oxford Lane and Federated Premier

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

The idea behind Oxford Lane Capital and Federated Premier Municipal 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.