Correlation Between Rock Oak and Pin Oak
Can any of the company-specific risk be diversified away by investing in both Rock Oak and Pin 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 Rock Oak and Pin Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rock Oak E and Pin Oak Equity, you can compare the effects of market volatilities on Rock Oak and Pin 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 Rock Oak with a short position of Pin Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rock Oak and Pin Oak.
Diversification Opportunities for Rock Oak and Pin Oak
Almost no diversification
The 3 months correlation between Rock and Pin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Rock Oak E and Pin Oak Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pin Oak Equity and Rock 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 Rock Oak E are associated (or correlated) with Pin Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pin Oak Equity has no effect on the direction of Rock Oak i.e., Rock Oak and Pin Oak go up and down completely randomly.
Pair Corralation between Rock Oak and Pin Oak
Assuming the 90 days horizon Rock Oak E is expected to generate 1.05 times more return on investment than Pin Oak. However, Rock Oak is 1.05 times more volatile than Pin Oak Equity. It trades about 0.25 of its potential returns per unit of risk. Pin Oak Equity is currently generating about 0.15 per unit of risk. If you would invest 1,963 in Rock Oak E on August 24, 2024 and sell it today you would earn a total of 116.00 from holding Rock Oak E or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rock Oak E vs. Pin Oak Equity
Performance |
| Timeline |
| Rock Oak E |
| Pin Oak Equity |
Rock Oak and Pin Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rock Oak and Pin Oak
The main advantage of trading using opposite Rock Oak and Pin Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Oak position performs unexpectedly, Pin 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 Pin Oak will offset losses from the drop in Pin Oak's long position.| Rock Oak vs. Live Oak Health | Rock Oak vs. River Oak Discovery | Rock Oak vs. Black Oak Emerging | Rock Oak vs. Pin Oak Equity |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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