Correlation Between Live Oak and Pin Oak
Can any of the company-specific risk be diversified away by investing in both Live Oak and Pin 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 Pin 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 Pin Oak Equity, you can compare the effects of market volatilities on Live Oak and Pin 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 Pin Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Pin Oak.
Diversification Opportunities for Live Oak and Pin Oak
Very good diversification
The 3 months correlation between LIVE and Pin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Pin Oak Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pin Oak Equity 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 Pin Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pin Oak Equity has no effect on the direction of Live Oak i.e., Live Oak and Pin Oak go up and down completely randomly.
Pair Corralation between Live Oak and Pin Oak
Assuming the 90 days horizon Live Oak is expected to generate 11.64 times less return on investment than Pin Oak. But when comparing it to its historical volatility, Live Oak Health is 1.12 times less risky than Pin Oak. It trades about 0.01 of its potential returns per unit of risk. Pin Oak Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,096 in Pin Oak Equity on August 28, 2024 and sell it today you would earn a total of 3,086 from holding Pin Oak Equity or generate 50.62% 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. Pin Oak Equity
Performance |
| Timeline |
| Live Oak Health |
| Pin Oak Equity |
Live Oak and Pin Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Pin Oak
The main advantage of trading using opposite Live Oak and Pin Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Pin 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 Pin Oak will offset losses from the drop in Pin 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 |
| Pin Oak vs. Red Oak Technology | Pin Oak vs. White Oak Select | Pin Oak vs. Black Oak Emerging | Pin Oak vs. Live Oak Health |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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