Correlation Between Live Oak and New Economy
Can any of the company-specific risk be diversified away by investing in both Live Oak and New Economy 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 New Economy 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 New Economy Fund, you can compare the effects of market volatilities on Live Oak and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and New Economy.
Diversification Opportunities for Live Oak and New Economy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LIVE and New is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Live Oak i.e., Live Oak and New Economy go up and down completely randomly.
Pair Corralation between Live Oak and New Economy
Assuming the 90 days horizon Live Oak Health is expected to generate 1.01 times more return on investment than New Economy. However, Live Oak is 1.01 times more volatile than New Economy Fund. It trades about 0.05 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.05 per unit of risk. If you would invest 2,167 in Live Oak Health on August 25, 2024 and sell it today you would earn a total of 21.00 from holding Live Oak Health or generate 0.97% 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. New Economy Fund
Performance |
| Timeline |
| Live Oak Health |
| New Economy Fund |
Live Oak and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and New Economy
The main advantage of trading using opposite Live Oak and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy'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 |
| New Economy vs. Alger Health Sciences | New Economy vs. Prudential Health Sciences | New Economy vs. Blackrock Health Sciences | New Economy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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