Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Eaton Vance 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 Eaton Vance 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 Eaton Vance Tax Managed, you can compare the effects of market volatilities on Oxford Lane and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Eaton Vance.
Diversification Opportunities for Oxford Lane and Eaton Vance
The 3 months correlation between Oxford and Eaton is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Eaton Vance Tax Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Oxford Lane i.e., Oxford Lane and Eaton Vance go up and down completely randomly.
Pair Corralation between Oxford Lane and Eaton Vance
Given the investment horizon of 90 days Oxford Lane Capital is expected to generate 1.14 times more return on investment than Eaton Vance. However, Oxford Lane is 1.14 times more volatile than Eaton Vance Tax Managed. It trades about 0.19 of its potential returns per unit of risk. Eaton Vance Tax Managed is currently generating about 0.12 per unit of risk. If you would invest 495.00 in Oxford Lane Capital on March 6, 2024 and sell it today you would earn a total of 48.00 from holding Oxford Lane Capital or generate 9.7% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Lane Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Oxford Lane may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax Managed are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Eaton Vance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.