Correlation Between Thornburg New and Live Oak
Can any of the company-specific risk be diversified away by investing in both Thornburg New 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 Thornburg New and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thornburg New Mexico and Live Oak Health, you can compare the effects of market volatilities on Thornburg New 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 Thornburg New with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg New and Live Oak.
Diversification Opportunities for Thornburg New and Live Oak
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thornburg and Live is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg New Mexico 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 Thornburg New 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 Thornburg New Mexico 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 Thornburg New i.e., Thornburg New and Live Oak go up and down completely randomly.
Pair Corralation between Thornburg New and Live Oak
Assuming the 90 days horizon Thornburg New is expected to generate 1.27 times less return on investment than Live Oak. But when comparing it to its historical volatility, Thornburg New Mexico is 5.53 times less risky than Live Oak. It trades about 0.16 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,193 in Live Oak Health on September 4, 2024 and sell it today you would earn a total of 14.00 from holding Live Oak Health or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thornburg New Mexico vs. Live Oak Health
Performance |
| Timeline |
| Thornburg New Mexico |
| Live Oak Health |
Thornburg New and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thornburg New and Live Oak
The main advantage of trading using opposite Thornburg New and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thornburg New 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.| Thornburg New vs. Thornburg Value Fund | Thornburg New vs. Thornburg Value Fund | Thornburg New vs. Thornburg International Value | Thornburg New vs. Thornburg International Value |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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