Correlation Between Black Oak and Long Term

Can any of the company-specific risk be diversified away by investing in both Black Oak and Long Term 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 Black Oak and Long Term into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Oak Emerging and Long Term Government Fund, you can compare the effects of market volatilities on Black Oak and Long Term 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 Black Oak with a short position of Long Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Long Term.

Diversification Opportunities for Black Oak and Long Term

-0.66

Correlation Coefficient

Black Oak  Long Term

Excellent diversification

The 3 months correlation between Black and Long is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Long Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Term Government and Black 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 Black Oak Emerging are associated (or correlated) with Long Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Term Government has no effect on the direction of Black Oak i.e., Black Oak and Long Term go up and down completely randomly.

Pair Corralation between Black Oak and Long Term

Assuming the 90 days horizon Black Oak Emerging is expected to generate 1.58 times more return on investment than Long Term. However, Black Oak is 1.58 times more volatile than Long Term Government Fund. It trades about 0.06 of its potential returns per unit of risk. Long Term Government Fund is currently generating about 0.03 per unit of risk. If you would invest  680.00  in Black Oak Emerging on September 14, 2024 and sell it today you would earn a total of  136.00  from holding Black Oak Emerging or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

Black Oak Emerging  vs.  Long Term Government Fund

Black Oak Emerging

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Oak Emerging are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Black Oak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Long Term Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Long Term Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Black Oak and Long Term

The main advantage of trading using opposite Black Oak and Long Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak position performs unexpectedly, Long Term 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 Long Term will offset losses from the drop in Long Term's long position.

The idea behind Black Oak Emerging and Long Term Government Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.