Correlation Between Oxford Lane and ScanSource

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

Diversification Opportunities for Oxford Lane and ScanSource

-0.1

Correlation Coefficient

Oxford Lane  ScanSource

Good diversification

The 3 months correlation between Oxford and ScanSource is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Oxford Lane i.e., Oxford Lane and ScanSource go up and down completely randomly.

Pair Corralation between Oxford Lane and ScanSource

Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the ScanSource. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Lane Capital is 1.2 times less risky than ScanSource. The stock trades about -0.09 of its potential returns per unit of risk. The ScanSource is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,247  in ScanSource on July 4, 2025 and sell it today you would earn a total of  80.50  from holding ScanSource or generate 1.9% return on investment over 90 days.

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

Oxford Lane Capital  vs.  ScanSource

Oxford Lane Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days Oxford Lane Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ScanSource

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource 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 Lane and ScanSource

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

The idea behind Oxford Lane Capital and ScanSource 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 Stocks Directory module to find actively traded stocks across global markets.