Correlation Between Live Oak and Jpmorgan
Can any of the company-specific risk be diversified away by investing in both Live Oak and Jpmorgan 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 Jpmorgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Oak Health and Jpmorgan Research Equity, you can compare the effects of market volatilities on Live Oak and Jpmorgan 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 Jpmorgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Jpmorgan.
Diversification Opportunities for Live Oak and Jpmorgan
Poor diversification
The 3 months correlation between LIVE and Jpmorgan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Jpmorgan Research Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Research Equity 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 Health are associated (or correlated) with Jpmorgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Research Equity has no effect on the direction of Live Oak i.e., Live Oak and Jpmorgan go up and down completely randomly.
Pair Corralation between Live Oak and Jpmorgan
Assuming the 90 days horizon Live Oak Health is expected to under-perform the Jpmorgan. In addition to that, Live Oak is 2.02 times more volatile than Jpmorgan Research Equity. It trades about -0.04 of its total potential returns per unit of risk. Jpmorgan Research Equity is currently generating about 0.02 per unit of volatility. If you would invest 1,459 in Jpmorgan Research Equity on December 4, 2024 and sell it today you would earn a total of 2.00 from holding Jpmorgan Research Equity or generate 0.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
Live Oak Health vs. Jpmorgan Research Equity
Performance |
Timeline |
Live Oak Health |
Jpmorgan Research Equity |
Live Oak and Jpmorgan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Live Oak and Jpmorgan
The main advantage of trading using opposite Live Oak and Jpmorgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Oak position performs unexpectedly, Jpmorgan 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 Jpmorgan will offset losses from the drop in Jpmorgan's long position.Live Oak vs. Black Oak Emerging | Live Oak vs. Pin Oak Equity | Live Oak vs. Red Oak Technology | Live Oak vs. White Oak Select |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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