Correlation Between Live Oak and State Street
Can any of the company-specific risk be diversified away by investing in both Live Oak and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on Live Oak and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and State Street.
Diversification Opportunities for Live Oak and State Street
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and State is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Live Oak i.e., Live Oak and State Street go up and down completely randomly.
Pair Corralation between Live Oak and State Street
Assuming the 90 days horizon Live Oak is expected to generate 5.16 times less return on investment than State Street. In addition to that, Live Oak is 1.62 times more volatile than State Street Target. It trades about 0.04 of its total potential returns per unit of risk. State Street Target is currently generating about 0.31 per unit of volatility. If you would invest 1,569 in State Street Target on September 2, 2024 and sell it today you would earn a total of 59.00 from holding State Street Target or generate 3.76% 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. State Street Target
Performance |
| Timeline |
| Live Oak Health |
| State Street Target |
Live Oak and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and State Street
The main advantage of trading using opposite Live Oak and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Live Oak Health | State Street vs. Blackrock Health Sciences | State Street vs. Eventide Healthcare Life | State Street vs. Deutsche Health And |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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