Correlation Between Oxford Lane and DTF Tax

Can any of the company-specific risk be diversified away by investing in both Oxford Lane and DTF Tax 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 DTF Tax 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 DTF Tax Free, you can compare the effects of market volatilities on Oxford Lane and DTF Tax 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 DTF Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and DTF Tax.

Diversification Opportunities for Oxford Lane and DTF Tax

0.31

Correlation Coefficient

Oxford Lane  DTF Tax

Weak diversification

The 3 months correlation between Oxford and DTF is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and DTF Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTF Tax Free 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 DTF Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTF Tax Free has no effect on the direction of Oxford Lane i.e., Oxford Lane and DTF Tax go up and down completely randomly.

Pair Corralation between Oxford Lane and DTF Tax

Assuming the 90 days horizon Oxford Lane Capital is expected to generate 1.14 times more return on investment than DTF Tax. However, Oxford Lane is 1.14 times more volatile than DTF Tax Free. It trades about 0.1 of its potential returns per unit of risk. DTF Tax Free is currently generating about 0.06 per unit of risk. If you would invest  2,163  in Oxford Lane Capital on September 30, 2024 and sell it today you would earn a total of  126.00  from holding Oxford Lane Capital or generate 5.83% return on investment over 90 days.

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

Oxford Lane Capital  vs.  DTF Tax Free

Oxford Lane Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Oxford Lane is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

DTF Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTF Tax Free has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DTF Tax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oxford Lane and DTF Tax

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

The idea behind Oxford Lane Capital and DTF Tax Free 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..