Correlation Between Oxford Lane and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both Oxford Lane and IShares NASDAQ 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 IShares NASDAQ 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 iShares NASDAQ 100, you can compare the effects of market volatilities on Oxford Lane and IShares NASDAQ 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 IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and IShares NASDAQ.
Diversification Opportunities for Oxford Lane and IShares NASDAQ
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Oxford and IShares is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 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 IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of Oxford Lane i.e., Oxford Lane and IShares NASDAQ go up and down completely randomly.
Pair Corralation between Oxford Lane and IShares NASDAQ
Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the IShares NASDAQ. In addition to that, Oxford Lane is 2.74 times more volatile than iShares NASDAQ 100. It trades about -0.08 of its total potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.12 per unit of volatility. If you would invest 125,300 in iShares NASDAQ 100 on June 5, 2025 and sell it today you would earn a total of 6,720 from holding iShares NASDAQ 100 or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Oxford Lane Capital vs. iShares NASDAQ 100
Performance |
| Timeline |
| Oxford Lane Capital |
| iShares NASDAQ 100 |
Oxford Lane and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oxford Lane and IShares NASDAQ
The main advantage of trading using opposite Oxford Lane and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxford Lane position performs unexpectedly, IShares NASDAQ 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 IShares NASDAQ will offset losses from the drop in IShares NASDAQ's long position.| Oxford Lane vs. Cornerstone Strategic Value | Oxford Lane vs. Cornerstone Strategic Return | Oxford Lane vs. Eagle Point Credit | Oxford Lane vs. Guggenheim Strategic Opportunities |
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against IShares NASDAQ as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. IShares NASDAQ's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, IShares NASDAQ's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to iShares NASDAQ 100.
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |