Correlation Between Oxford Lane and Direxion Daily

Can any of the company-specific risk be diversified away by investing in both Oxford Lane and Direxion Daily 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 Direxion Daily 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 Direxion Daily 20, you can compare the effects of market volatilities on Oxford Lane and Direxion Daily 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 Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Lane and Direxion Daily.

Diversification Opportunities for Oxford Lane and Direxion Daily

0.03

Correlation Coefficient

Oxford Lane  Direxion Daily

Significant diversification

The 3 months correlation between Oxford and Direxion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Lane Capital and Direxion Daily 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily 20 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 Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily 20 has no effect on the direction of Oxford Lane i.e., Oxford Lane and Direxion Daily go up and down completely randomly.

Pair Corralation between Oxford Lane and Direxion Daily

Given the investment horizon of 90 days Oxford Lane Capital is expected to under-perform the Direxion Daily. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Lane Capital is 1.25 times less risky than Direxion Daily. The stock trades about -0.22 of its potential returns per unit of risk. The Direxion Daily 20 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,923  in Direxion Daily 20 on May 7, 2025 and sell it today you would lose (3.00) from holding Direxion Daily 20 or give up 0.08% of portfolio value over 90 days.

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

Oxford Lane Capital  vs.  Direxion Daily 20

Oxford Lane Capital

Risk-Adjusted Performance

Very Weak

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 unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Direxion Daily 20

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily 20 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Direxion Daily is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oxford Lane and Direxion Daily

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

The idea behind Oxford Lane Capital and Direxion Daily 20 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.