I am wondering what metric is better at incorporating credit risk, is that OAS or effective yield for the floater coupon bonds? What intuition each of them carries out? When would I use or the other for estimating the volatility?
You can calculate the yield of a floater and compare to a yield of a benchmark. However a floater's yield will change whenever the projection curve moves.
Spread measures like discount margin (DM) or OAS or Z-spread (if non-callable) seem like a more intuitive way of comparing credit risk to other bonds.