Correlation Between Live Oak and Black Oak
Can any of the company-specific risk be diversified away by investing in both Live Oak and Black 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 Live Oak and Black Oak 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 Black Oak Emerging, you can compare the effects of market volatilities on Live Oak and Black 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 Live Oak with a short position of Black Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Black Oak.
Diversification Opportunities for Live Oak and Black Oak
Very good diversification
The 3 months correlation between LIVE and Black is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging 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 Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Live Oak i.e., Live Oak and Black Oak go up and down completely randomly.
Pair Corralation between Live Oak and Black Oak
Assuming the 90 days horizon Live Oak is expected to generate 3.4 times less return on investment than Black Oak. But when comparing it to its historical volatility, Live Oak Health is 1.71 times less risky than Black Oak. It trades about 0.03 of its potential returns per unit of risk. Black Oak Emerging is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 674.00 in Black Oak Emerging on August 24, 2024 and sell it today you would earn a total of 139.00 from holding Black Oak Emerging or generate 20.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. Black Oak Emerging
Performance |
| Timeline |
| Live Oak Health |
| Black Oak Emerging |
Live Oak and Black Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Black Oak
The main advantage of trading using opposite Live Oak and Black Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Black 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 Black Oak will offset losses from the drop in Black Oak'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 |
| Black Oak vs. Vanguard Information Technology | Black Oak vs. Technology Portfolio Technology | Black Oak vs. Fidelity Select Semiconductors | Black Oak vs. Software And It |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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