Correlation Between Live Oak and Ameris Bancorp

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

By analyzing existing cross correlation between Live Oak Bancshares and Ameris Bancorp, you can compare the effects of market volatilities on Live Oak and Ameris Bancorp 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 Live Oak with a short position of Ameris Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Ameris Bancorp.

Diversification Opportunities for Live Oak and Ameris Bancorp

0.57

Correlation Coefficient

Live Oak  Ameris Bancorp

Very weak diversification

The 3 months correlation between Live and Ameris is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Bancshares and Ameris Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameris Bancorp and Live 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 Live Oak Bancshares are associated (or correlated) with Ameris Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameris Bancorp has no effect on the direction of Live Oak i.e., Live Oak and Ameris Bancorp go up and down completely randomly.

Pair Corralation between Live Oak and Ameris Bancorp

Considering the 90-day investment horizon Live Oak Bancshares is expected to under-perform the Ameris Bancorp. In addition to that, Live Oak is 1.42 times more volatile than Ameris Bancorp. It trades about -0.19 of its total potential returns per unit of risk. Ameris Bancorp is currently generating about -0.19 per unit of volatility. If you would invest  6,970  in Ameris Bancorp on October 9, 2024 and sell it today you would lose (741.00) from holding Ameris Bancorp or give up 10.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Live Oak Bancshares  vs.  Ameris Bancorp

Live Oak Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Oak Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ameris Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ameris Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Ameris Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Live Oak and Ameris Bancorp

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

The idea behind Live Oak Bancshares and Ameris Bancorp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.