Correlation Between Live Oak and White Oak
Can any of the company-specific risk be diversified away by investing in both Live Oak and White Oak 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 White Oak 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 White Oak Select, you can compare the effects of market volatilities on Live Oak and White Oak 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 White Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and White Oak.
Diversification Opportunities for Live Oak and White Oak
Very good diversification
The 3 months correlation between LIVE and White is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and White Oak Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Oak Select 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 White Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Oak Select has no effect on the direction of Live Oak i.e., Live Oak and White Oak go up and down completely randomly.
Pair Corralation between Live Oak and White Oak
Assuming the 90 days horizon Live Oak Health is expected to generate 1.09 times more return on investment than White Oak. However, Live Oak is 1.09 times more volatile than White Oak Select. It trades about 0.08 of its potential returns per unit of risk. White Oak Select is currently generating about 0.07 per unit of risk. If you would invest 2,166 in Live Oak Health on August 28, 2024 and sell it today you would earn a total of 32.00 from holding Live Oak Health or generate 1.48% 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. White Oak Select
Performance |
| Timeline |
| Live Oak Health |
| White Oak Select |
Live Oak and White Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Oak and White Oak
The main advantage of trading using opposite Live Oak and White Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, White Oak 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 White Oak will offset losses from the drop in White Oak'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 |
| White Oak vs. Red Oak Technology | White Oak vs. Pin Oak Equity | White Oak vs. Black Oak Emerging | White Oak vs. Victory Rs Small |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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