Correlation Between Live Oak and American Century
Can any of the company-specific risk be diversified away by investing in both Live Oak and American Century 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 Live Oak and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Oak Health and American Century Focused, you can compare the effects of market volatilities on Live Oak and American Century 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 Live Oak with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and American Century.
Diversification Opportunities for Live Oak and American Century
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Live and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and American Century Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Focused and Live Oak 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 Live Oak Health are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Focused has no effect on the direction of Live Oak i.e., Live Oak and American Century go up and down completely randomly.
Pair Corralation between Live Oak and American Century
Assuming the 90 days horizon Live Oak Health is expected to under-perform the American Century. In addition to that, Live Oak is 1.06 times more volatile than American Century Focused. It trades about -0.31 of its total potential returns per unit of risk. American Century Focused is currently generating about -0.02 per unit of volatility. If you would invest 1,782 in American Century Focused on September 12, 2024 and sell it today you would lose (8.00) from holding American Century Focused or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Live Oak Health vs. American Century Focused
Performance |
| Timeline |
| Live Oak Health |
| American Century Focused |
Live Oak and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and American Century
The main advantage of trading using opposite Live Oak and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Live Oak vs. Black Oak Emerging | Live Oak vs. Pin Oak Equity | Live Oak vs. Red Oak Technology | Live Oak vs. White Oak Select |
| American Century vs. Live Oak Health | American Century vs. Blackrock Health Sciences | American Century vs. Delaware Healthcare Fund | American Century vs. Eventide Healthcare Life |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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