Correlation Between Oracle and Leverage Shares

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

By analyzing existing cross correlation between Oracle and Leverage Shares 3x, you can compare the effects of market volatilities on Oracle and Leverage Shares 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 Oracle with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Leverage Shares.

Diversification Opportunities for Oracle and Leverage Shares

0.65

Correlation Coefficient

Oracle  Leverage Shares

Poor diversification

The 3 months correlation between Oracle and Leverage is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x and Oracle 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 Oracle are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Oracle i.e., Oracle and Leverage Shares go up and down completely randomly.

Pair Corralation between Oracle and Leverage Shares

Given the investment horizon of 90 days Oracle is expected to generate 0.24 times more return on investment than Leverage Shares. However, Oracle is 4.12 times less risky than Leverage Shares. It trades about -0.07 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about -0.12 per unit of risk. If you would invest  16,648  in Oracle on December 30, 2024 and sell it today you would lose (2,561) from holding Oracle or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Oracle  vs.  Leverage Shares 3x

Oracle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oracle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Leverage Shares 3x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leverage Shares 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Oracle and Leverage Shares

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

The idea behind Oracle and Leverage Shares 3x 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.