Correlation Between Tradeweb Markets and Oxford Square

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

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

Diversification Opportunities for Tradeweb Markets and Oxford Square

0.64

Correlation Coefficient

Tradeweb Markets  Oxford Square

Poor diversification

The 3 months correlation between Tradeweb and Oxford is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Oxford Square Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Square Capital and Tradeweb Markets 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 Tradeweb Markets are associated (or correlated) with Oxford Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Square Capital has no effect on the direction of Tradeweb Markets i.e., Tradeweb Markets and Oxford Square go up and down completely randomly.

Pair Corralation between Tradeweb Markets and Oxford Square

Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 2.75 times more return on investment than Oxford Square. However, Tradeweb Markets is 2.75 times more volatile than Oxford Square Capital. It trades about 0.13 of its potential returns per unit of risk. Oxford Square Capital is currently generating about 0.08 per unit of risk. If you would invest  12,029  in Tradeweb Markets on September 19, 2024 and sell it today you would earn a total of  1,300  from holding Tradeweb Markets or generate 10.81% return on investment over 90 days.

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

Tradeweb Markets  vs.  Oxford Square Capital

Tradeweb Markets

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tradeweb Markets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oxford Square Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Oxford Square is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tradeweb Markets and Oxford Square

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

The idea behind Tradeweb Markets and Oxford Square 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.