Correlation Between Live Oak and Short Precious
Can any of the company-specific risk be diversified away by investing in both Live Oak and Short Precious 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 Short Precious 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 Short Precious Metals, you can compare the effects of market volatilities on Live Oak and Short Precious 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 Short Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Short Precious.
Diversification Opportunities for Live Oak and Short Precious
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Live and Short is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Short Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Precious Metals 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 Short Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Precious Metals has no effect on the direction of Live Oak i.e., Live Oak and Short Precious go up and down completely randomly.
Pair Corralation between Live Oak and Short Precious
Assuming the 90 days horizon Live Oak Health is expected to under-perform the Short Precious. But the mutual fund apears to be less risky and, when comparing its historical volatility, Live Oak Health is 2.19 times less risky than Short Precious. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Short Precious Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 962.00 in Short Precious Metals on October 28, 2024 and sell it today you would lose (27.00) from holding Short Precious Metals or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Oak Health vs. Short Precious Metals
Performance |
| Timeline |
| Live Oak Health |
| Short Precious Metals |
Live Oak and Short Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and Short Precious
The main advantage of trading using opposite Live Oak and Short Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Short Precious 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 Short Precious will offset losses from the drop in Short Precious' 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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