Correlation Between Live Oak and Tributary Small/mid
Can any of the company-specific risk be diversified away by investing in both Live Oak and Tributary Small/mid 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 Tributary Small/mid 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 Tributary Smallmid Cap, you can compare the effects of market volatilities on Live Oak and Tributary Small/mid 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 Tributary Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Tributary Small/mid.
Diversification Opportunities for Live Oak and Tributary Small/mid
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and Tributary is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Tributary Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tributary Smallmid Cap 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 Tributary Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tributary Smallmid Cap has no effect on the direction of Live Oak i.e., Live Oak and Tributary Small/mid go up and down completely randomly.
Pair Corralation between Live Oak and Tributary Small/mid
Assuming the 90 days horizon Live Oak is expected to generate 4.65 times less return on investment than Tributary Small/mid. But when comparing it to its historical volatility, Live Oak Health is 1.31 times less risky than Tributary Small/mid. It trades about 0.03 of its potential returns per unit of risk. Tributary Smallmid Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,477 in Tributary Smallmid Cap on September 4, 2024 and sell it today you would earn a total of 356.00 from holding Tributary Smallmid Cap or generate 24.1% 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. Tributary Smallmid Cap
Performance |
| Timeline |
| Live Oak Health |
| Tributary Smallmid Cap |
Live Oak and Tributary Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Tributary Small/mid
The main advantage of trading using opposite Live Oak and Tributary Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Tributary Small/mid 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 Tributary Small/mid will offset losses from the drop in Tributary Small/mid'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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