Correlation Between Cognios Market and Live Oak
Can any of the company-specific risk be diversified away by investing in both Cognios Market 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 Cognios Market and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognios Market Neutral and Live Oak Health, you can compare the effects of market volatilities on Cognios Market 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 Cognios Market with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognios Market and Live Oak.
Diversification Opportunities for Cognios Market and Live Oak
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cognios and Live is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cognios Market Neutral 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 Cognios Market 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 Cognios Market Neutral 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 Cognios Market i.e., Cognios Market and Live Oak go up and down completely randomly.
Pair Corralation between Cognios Market and Live Oak
Assuming the 90 days horizon Cognios Market Neutral is expected to under-perform the Live Oak. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cognios Market Neutral is 2.92 times less risky than Live Oak. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Live Oak Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,079 in Live Oak Health on October 23, 2024 and sell it today you would earn a total of 4.00 from holding Live Oak Health or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognios Market Neutral vs. Live Oak Health
Performance |
| Timeline |
| Cognios Market Neutral |
| Live Oak Health |
Cognios Market and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognios Market and Live Oak
The main advantage of trading using opposite Cognios Market and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognios Market 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.| Cognios Market vs. Live Oak Health | Cognios Market vs. Deutsche Health And | Cognios Market vs. Prudential Health Sciences | Cognios Market vs. Fidelity Advisor Health |
| Live Oak vs. Black Oak Emerging | Live Oak vs. Pin Oak Equity | Live Oak vs. Red Oak Technology | Live Oak vs. White Oak Select |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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