Correlation Between Live Oak and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Live Oak and Sparta Capital 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 Sparta Capital 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 Sparta Capital, you can compare the effects of market volatilities on Live Oak and Sparta Capital 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 Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Sparta Capital.
Diversification Opportunities for Live Oak and Sparta Capital
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Live and Sparta is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Live Oak i.e., Live Oak and Sparta Capital go up and down completely randomly.
Pair Corralation between Live Oak and Sparta Capital
Assuming the 90 days horizon Live Oak Health is expected to generate 0.19 times more return on investment than Sparta Capital. However, Live Oak Health is 5.25 times less risky than Sparta Capital. It trades about 0.1 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.22 per unit of risk. If you would invest 2,168 in Live Oak Health on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Live Oak Health or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. Sparta Capital
Performance |
| Timeline |
| Live Oak Health |
| Sparta Capital |
Live Oak and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Sparta Capital
The main advantage of trading using opposite Live Oak and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital'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 |
| Sparta Capital vs. Legacy Education | Sparta Capital vs. Apple Inc | Sparta Capital vs. NVIDIA | Sparta Capital vs. Microsoft |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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