Correlation Between American Funds and Live Oak
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Live Oak Health, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Live Oak.
Diversification Opportunities for American Funds and Live Oak
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Live is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental 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 American Funds 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 American Funds Fundamental 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 American Funds i.e., American Funds and Live Oak go up and down completely randomly.
Pair Corralation between American Funds and Live Oak
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.75 times more return on investment than Live Oak. However, American Funds Fundamental is 1.34 times less risky than Live Oak. It trades about 0.11 of its potential returns per unit of risk. Live Oak Health is currently generating about -0.3 per unit of risk. If you would invest 8,840 in American Funds Fundamental on September 13, 2024 and sell it today you would earn a total of 125.00 from holding American Funds Fundamental or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Live Oak Health
Performance |
| Timeline |
| American Funds Funda |
| Live Oak Health |
American Funds and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Live Oak
The main advantage of trading using opposite American Funds and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Touchstone Premium Yield | American Funds vs. The National Tax Free | American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ishares Municipal Bond |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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