Correlation Between Live Oak and American Funds
Can any of the company-specific risk be diversified away by investing in both Live Oak and American Funds 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 Funds 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 Funds 2040, you can compare the effects of market volatilities on Live Oak and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and American Funds.
Diversification Opportunities for Live Oak and American Funds
-0.42 | Correlation Coefficient |
Very good 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 Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Live Oak i.e., Live Oak and American Funds go up and down completely randomly.
Pair Corralation between Live Oak and American Funds
Assuming the 90 days horizon Live Oak Health is expected to under-perform the American Funds. In addition to that, Live Oak is 1.55 times more volatile than American Funds 2040. It trades about -0.05 of its total potential returns per unit of risk. American Funds 2040 is currently generating about 0.04 per unit of volatility. If you would invest 2,129 in American Funds 2040 on August 29, 2024 and sell it today you would earn a total of 19.00 from holding American Funds 2040 or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. American Funds 2040
Performance |
| Timeline |
| Live Oak Health |
| American Funds 2040 |
Live Oak and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and American Funds
The main advantage of trading using opposite Live Oak and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Live Oak vs. Fidelity Advisor Technology | Live Oak vs. Fidelity Advisor Biotechnology | Live Oak vs. Fidelity Advisor Financial | Live Oak vs. Fidelity Advisor Utilities |
| American Funds vs. Alger Health Sciences | American Funds vs. Live Oak Health | American Funds vs. The Gabelli Healthcare | American Funds vs. Baillie Gifford 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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