Correlation Between Oxford Square and TravelCenters

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

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

Diversification Opportunities for Oxford Square and TravelCenters

0.86

Correlation Coefficient

Oxford Square  TravelCenters

Very poor diversification

The 3 months correlation between Oxford and TravelCenters is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Square Capital and TravelCenters Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TravelCenters Of America and Oxford Square 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 Square Capital are associated (or correlated) with TravelCenters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TravelCenters Of America has no effect on the direction of Oxford Square i.e., Oxford Square and TravelCenters go up and down completely randomly.

Pair Corralation between Oxford Square and TravelCenters

If you would invest  2,526  in TravelCenters Of America on September 19, 2024 and sell it today you would earn a total of  0.00  from holding TravelCenters Of America or generate 0.0% return on investment over 90 days.

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

Oxford Square Capital  vs.  TravelCenters Of America

Oxford Square Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Square Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oxford Square is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

TravelCenters Of America

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TravelCenters Of America has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TravelCenters is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oxford Square and TravelCenters

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

The idea behind Oxford Square Capital and TravelCenters Of America 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.