Correlation Between Live Oak and Sprucegrove International

Can any of the company-specific risk be diversified away by investing in both Live Oak and Sprucegrove International 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 Sprucegrove International 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 Sprucegrove International Equity, you can compare the effects of market volatilities on Live Oak and Sprucegrove International 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 Sprucegrove International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Oak and Sprucegrove International.

Diversification Opportunities for Live Oak and Sprucegrove International

0.62

Correlation Coefficient

Live Oak  Sprucegrove International

Poor diversification

The 3 months correlation between Live and Sprucegrove is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Sprucegrove International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprucegrove International 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 Sprucegrove International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprucegrove International has no effect on the direction of Live Oak i.e., Live Oak and Sprucegrove International go up and down completely randomly.

Pair Corralation between Live Oak and Sprucegrove International

Assuming the 90 days horizon Live Oak is expected to generate 5.71 times less return on investment than Sprucegrove International. In addition to that, Live Oak is 1.03 times more volatile than Sprucegrove International Equity. It trades about 0.02 of its total potential returns per unit of risk. Sprucegrove International Equity is currently generating about 0.13 per unit of volatility. If you would invest  6,533  in Sprucegrove International Equity on December 22, 2024 and sell it today you would earn a total of  443.00  from holding Sprucegrove International Equity or generate 6.78% return on investment over 90 days.

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

Live Oak Health  vs.  Sprucegrove International Equi

Live Oak Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Live Oak Health are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Live Oak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sprucegrove International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprucegrove International Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sprucegrove International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Live Oak and Sprucegrove International

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

The idea behind Live Oak Health and Sprucegrove International Equity 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.