Correlation Between Virginia National and Live Oak
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and Live Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Live Oak Bancshares, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Live Oak.
Diversification Opportunities for Virginia National and Live Oak
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virginia and Live is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Live Oak Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Bancshares and Virginia National 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 Virginia National Bankshares 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 Bancshares has no effect on the direction of Virginia National i.e., Virginia National and Live Oak go up and down completely randomly.
Pair Corralation between Virginia National and Live Oak
Given the investment horizon of 90 days Virginia National Bankshares is expected to generate 0.78 times more return on investment than Live Oak. However, Virginia National Bankshares is 1.28 times less risky than Live Oak. It trades about 0.03 of its potential returns per unit of risk. Live Oak Bancshares is currently generating about 0.0 per unit of risk. If you would invest 3,228 in Virginia National Bankshares on November 9, 2024 and sell it today you would earn a total of 477.00 from holding Virginia National Bankshares or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Live Oak Bancshares
Performance |
| Timeline |
| Virginia National |
| Live Oak Bancshares |
Virginia National and Live Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Live Oak
The main advantage of trading using opposite Virginia National and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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