Correlation Between Equity Growth and Live Oak
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Live 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 Equity Growth and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Strategy and Live Oak Health, you can compare the effects of market volatilities on Equity Growth and Live 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 Equity Growth with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Live Oak.
Diversification Opportunities for Equity Growth and Live Oak
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equity and Live is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Strategy and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health and Equity Growth 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 Equity Growth Strategy are associated (or correlated) with Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Health has no effect on the direction of Equity Growth i.e., Equity Growth and Live Oak go up and down completely randomly.
Pair Corralation between Equity Growth and Live Oak
Assuming the 90 days horizon Equity Growth Strategy is expected to generate 0.86 times more return on investment than Live Oak. However, Equity Growth Strategy is 1.16 times less risky than Live Oak. It trades about 0.14 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.04 per unit of risk. If you would invest 1,065 in Equity Growth Strategy on September 1, 2024 and sell it today you would earn a total of 293.00 from holding Equity Growth Strategy or generate 27.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Strategy vs. Live Oak Health
Performance |
| Timeline |
| Equity Growth Strategy |
| Live Oak Health |
Equity Growth and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Live Oak
The main advantage of trading using opposite Equity Growth and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Live 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 Live Oak will offset losses from the drop in Live Oak's long position.| Equity Growth vs. International Developed Markets | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate | Equity Growth vs. Global Real Estate |
| Live Oak vs. Black Oak Emerging | Live Oak vs. Pin Oak Equity | Live Oak vs. Red Oak Technology | Live Oak vs. White Oak Select |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |