Correlation Between Absolute Strategies and Live Oak
Can any of the company-specific risk be diversified away by investing in both Absolute Strategies and Live Oak 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 Absolute Strategies and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Strategies Fund and Live Oak Health, you can compare the effects of market volatilities on Absolute Strategies and Live Oak 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 Absolute Strategies with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Strategies and Live Oak.
Diversification Opportunities for Absolute Strategies and Live Oak
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Absolute and Live is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Strategies Fund and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health and Absolute Strategies 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 Absolute Strategies Fund are associated (or correlated) with Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Health has no effect on the direction of Absolute Strategies i.e., Absolute Strategies and Live Oak go up and down completely randomly.
Pair Corralation between Absolute Strategies and Live Oak
Assuming the 90 days horizon Absolute Strategies Fund is expected to under-perform the Live Oak. But the mutual fund apears to be less risky and, when comparing its historical volatility, Absolute Strategies Fund is 1.66 times less risky than Live Oak. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Live Oak Health is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,070 in Live Oak Health on September 3, 2024 and sell it today you would earn a total of 142.00 from holding Live Oak Health or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.99% |
| Values | Daily Returns |
Absolute Strategies Fund vs. Live Oak Health
Performance |
| Timeline |
| Absolute Strategies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Live Oak Health |
Absolute Strategies and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Strategies and Live Oak
The main advantage of trading using opposite Absolute Strategies and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Strategies position performs unexpectedly, Live Oak 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 Live Oak will offset losses from the drop in Live Oak's long position.| Absolute Strategies vs. Fundamental Large Cap | Absolute Strategies vs. Vanguard Windsor Fund | Absolute Strategies vs. American Mutual Fund | Absolute Strategies vs. Siit Large Cap |
| Live Oak vs. Vanguard Health Care | Live Oak vs. Vanguard Health Care | Live Oak vs. T Rowe Price | Live Oak vs. T Rowe Price |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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