Correlation Between Alphabet and Oaktree Acquisition

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

By analyzing existing cross correlation between Alphabet Inc Class C and Oaktree Acquisition Corp, you can compare the effects of market volatilities on Alphabet and Oaktree Acquisition 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 Alphabet with a short position of Oaktree Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Oaktree Acquisition.

Diversification Opportunities for Alphabet and Oaktree Acquisition

-0.24

Correlation Coefficient

Alphabet  Oaktree Acquisition

Very good diversification

The 3 months correlation between Alphabet and Oaktree is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Oaktree Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oaktree Acquisition Corp and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Oaktree Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oaktree Acquisition Corp has no effect on the direction of Alphabet i.e., Alphabet and Oaktree Acquisition go up and down completely randomly.

Pair Corralation between Alphabet and Oaktree Acquisition

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 4.82 times more return on investment than Oaktree Acquisition. However, Alphabet is 4.82 times more volatile than Oaktree Acquisition Corp. It trades about 0.15 of its potential returns per unit of risk. Oaktree Acquisition Corp is currently generating about 0.04 per unit of risk. If you would invest  17,713  in Alphabet Inc Class C on September 21, 2024 and sell it today you would earn a total of  1,257  from holding Alphabet Inc Class C or generate 7.1% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Oaktree Acquisition Corp

Alphabet Class C

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Oaktree Acquisition Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Acquisition Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Oaktree Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alphabet and Oaktree Acquisition

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

The idea behind Alphabet Inc Class C and Oaktree Acquisition Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.