Correlation Between First Capital and Live Oak

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

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

Diversification Opportunities for First Capital and Live Oak

0.6

Correlation Coefficient

First Capital  Live Oak

Poor diversification

The 3 months correlation between First and Live is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and Live Oak Bancshares, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Bancshares, and First Capital 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 First Capital 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 Bancshares, has no effect on the direction of First Capital i.e., First Capital and Live Oak go up and down completely randomly.

Pair Corralation between First Capital and Live Oak

Given the investment horizon of 90 days First Capital is expected to generate 1.15 times more return on investment than Live Oak. However, First Capital is 1.15 times more volatile than Live Oak Bancshares,. It trades about 0.05 of its potential returns per unit of risk. Live Oak Bancshares, is currently generating about 0.05 per unit of risk. If you would invest  3,875  in First Capital on July 23, 2025 and sell it today you would earn a total of  241.00  from holding First Capital or generate 6.22% return on investment over 90 days.

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

First Capital  vs.  Live Oak Bancshares,

First Capital

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, First Capital may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Live Oak Bancshares,

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Live Oak Bancshares, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Live Oak may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with First Capital and Live Oak

The main advantage of trading using opposite First Capital and Live Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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 First Capital and Live Oak Bancshares, 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.