Correlation Between Mm Sp and Live Oak

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

By analyzing existing cross correlation between Mm Sp 500 and Live Oak Health, you can compare the effects of market volatilities on Mm Sp 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 Mm Sp with a short position of Live Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mm Sp and Live Oak.

Diversification Opportunities for Mm Sp and Live Oak

0.88

Correlation Coefficient

Mm Sp  Live Oak

Very poor diversification

The 3 months correlation between MMIEX and Live is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mm Sp 500 and Live Oak Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Health and Mm Sp 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 Mm Sp 500 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 Health has no effect on the direction of Mm Sp i.e., Mm Sp and Live Oak go up and down completely randomly.

Pair Corralation between Mm Sp and Live Oak

Assuming the 90 days horizon Mm Sp 500 is expected to generate 0.96 times more return on investment than Live Oak. However, Mm Sp 500 is 1.05 times less risky than Live Oak. It trades about 0.03 of its potential returns per unit of risk. Live Oak Health is currently generating about 0.02 per unit of risk. If you would invest  1,499  in Mm Sp 500 on October 23, 2024 and sell it today you would earn a total of  7.00  from holding Mm Sp 500 or generate 0.47% return on investment over 90 days.

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

Mm Sp 500  vs.  Live Oak Health

Mm Sp 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mm Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly 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 fund investors.

Live Oak Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Oak Health has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Mm Sp and Live Oak

The main advantage of trading using opposite Mm Sp and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mm Sp 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.

The idea behind Mm Sp 500 and Live Oak Health 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.