Correlation Between Live Oak and American Beacon
Can any of the company-specific risk be diversified away by investing in both Live Oak and American Beacon 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 Beacon 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 Beacon Small, you can compare the effects of market volatilities on Live Oak and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and American Beacon.
Diversification Opportunities for Live Oak and American Beacon
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Live and American is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Live Oak i.e., Live Oak and American Beacon go up and down completely randomly.
Pair Corralation between Live Oak and American Beacon
Assuming the 90 days horizon Live Oak Health is expected to under-perform the American Beacon. In addition to that, Live Oak is 5.19 times more volatile than American Beacon Small. It trades about -0.11 of its total potential returns per unit of risk. American Beacon Small is currently generating about -0.04 per unit of volatility. If you would invest 2,152 in American Beacon Small on September 12, 2024 and sell it today you would lose (8.00) from holding American Beacon Small or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. American Beacon Small
Performance |
| Timeline |
| Live Oak Health |
| American Beacon Small |
Live Oak and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and American Beacon
The main advantage of trading using opposite Live Oak and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon'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 Beacon vs. Ab Impact Municipal | American Beacon vs. T Rowe Price | American Beacon vs. Baird Strategic Municipal | American Beacon 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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