Correlation Between Oxbridge and Maiden Holdings

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

By analyzing existing cross correlation between Oxbridge Re Holdings and Maiden Holdings, you can compare the effects of market volatilities on Oxbridge and Maiden Holdings 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 Oxbridge with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxbridge and Maiden Holdings.

Diversification Opportunities for Oxbridge and Maiden Holdings

0.32

Correlation Coefficient

Oxbridge  Maiden Holdings

Weak diversification

The 3 months correlation between Oxbridge and Maiden is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Oxbridge Re Holdings and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Oxbridge 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 Oxbridge Re Holdings are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Oxbridge i.e., Oxbridge and Maiden Holdings go up and down completely randomly.

Pair Corralation between Oxbridge and Maiden Holdings

Assuming the 90 days horizon Oxbridge Re Holdings is expected to generate 4.83 times more return on investment than Maiden Holdings. However, Oxbridge is 4.83 times more volatile than Maiden Holdings. It trades about 0.18 of its potential returns per unit of risk. Maiden Holdings is currently generating about 0.08 per unit of risk. If you would invest  1.51  in Oxbridge Re Holdings on January 31, 2024 and sell it today you would earn a total of  1.74  from holding Oxbridge Re Holdings or generate 115.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	58.73%
Values	Daily Returns

Oxbridge Re Holdings  vs.  Maiden Holdings

Oxbridge Re Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Oxbridge Re Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady basic indicators, Oxbridge showed solid returns over the last few months and may actually be approaching a breakup point.

Maiden Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maiden Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Maiden Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oxbridge and Maiden Holdings

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

The idea behind Oxbridge Re Holdings and Maiden Holdings 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.