Correlation Between Live Oak and Berkshire Focus
Can any of the company-specific risk be diversified away by investing in both Live Oak and Berkshire Focus 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 Berkshire Focus 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 Berkshire Focus, you can compare the effects of market volatilities on Live Oak and Berkshire Focus 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 Berkshire Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Berkshire Focus.
Diversification Opportunities for Live Oak and Berkshire Focus
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LIVE and Berkshire is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Berkshire Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Focus 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 Berkshire Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Focus has no effect on the direction of Live Oak i.e., Live Oak and Berkshire Focus go up and down completely randomly.
Pair Corralation between Live Oak and Berkshire Focus
Assuming the 90 days horizon Live Oak is expected to generate 15.83 times less return on investment than Berkshire Focus. But when comparing it to its historical volatility, Live Oak Health is 2.19 times less risky than Berkshire Focus. It trades about 0.05 of its potential returns per unit of risk. Berkshire Focus is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 2,643 in Berkshire Focus on August 24, 2024 and sell it today you would earn a total of 469.00 from holding Berkshire Focus or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. Berkshire Focus
Performance |
| Timeline |
| Live Oak Health |
| Berkshire Focus |
Live Oak and Berkshire Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Berkshire Focus
The main advantage of trading using opposite Live Oak and Berkshire Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Berkshire Focus 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 Berkshire Focus will offset losses from the drop in Berkshire Focus' 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 |
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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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