Correlation Between Oxford Square and Eagle Point

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

Diversification Opportunities for Oxford Square and Eagle Point

0.44

Correlation Coefficient

Oxford Square  Eagle Point

Very weak diversification

The 3 months correlation between Oxford and Eagle is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Square Capital and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit 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 Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of Oxford Square i.e., Oxford Square and Eagle Point go up and down completely randomly.

Pair Corralation between Oxford Square and Eagle Point

Given the investment horizon of 90 days Oxford Square is expected to generate 1.77 times less return on investment than Eagle Point. In addition to that, Oxford Square is 1.9 times more volatile than Eagle Point Credit. It trades about 0.05 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about 0.18 per unit of volatility. If you would invest  963.00  in Eagle Point Credit on March 4, 2024 and sell it today you would earn a total of  56.00  from holding Eagle Point Credit or generate 5.82% return on investment over 90 days.

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

Oxford Square Capital  vs.  Eagle Point Credit

Oxford Square Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Oxford Square is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Eagle Point Credit

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Point Credit are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Eagle Point is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Oxford Square and Eagle Point

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

The idea behind Oxford Square Capital and Eagle Point Credit 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.