Correlation Between Live Oak and Emerging Markets

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

Diversification Opportunities for Live Oak and Emerging Markets

0.23

Correlation Coefficient

Live Oak  Emerging Markets

Modest diversification

The 3 months correlation between Live and Emerging is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Live Oak Health and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Live Oak i.e., Live Oak and Emerging Markets go up and down completely randomly.

Pair Corralation between Live Oak and Emerging Markets

Assuming the 90 days horizon Live Oak Health is expected to under-perform the Emerging Markets. In addition to that, Live Oak is 1.39 times more volatile than Emerging Markets Portfolio. It trades about 0.0 of its total potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.13 per unit of volatility. If you would invest  2,275  in Emerging Markets Portfolio on May 14, 2025 and sell it today you would earn a total of  124.00  from holding Emerging Markets Portfolio or generate 5.45% return on investment over 90 days.

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

Live Oak Health  vs.  Emerging Markets Portfolio

Live Oak Health

Risk-Adjusted Performance

Weakest

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.

Emerging Markets Por

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Live Oak and Emerging Markets

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

The idea behind Live Oak Health and Emerging Markets Portfolio 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.