Correlation Between Oracle and Avantis International

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

By analyzing existing cross correlation between Oracle and Avantis International Equity, you can compare the effects of market volatilities on Oracle and Avantis International 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 Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Avantis International.

Diversification Opportunities for Oracle and Avantis International

0.32

Correlation Coefficient

Oracle  Avantis International

Weak diversification

The 3 months correlation between Oracle and Avantis is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Avantis International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International 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 Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Oracle i.e., Oracle and Avantis International go up and down completely randomly.

Pair Corralation between Oracle and Avantis International

Given the investment horizon of 90 days Oracle is expected to generate 2.59 times less return on investment than Avantis International. In addition to that, Oracle is 4.7 times more volatile than Avantis International Equity. It trades about 0.02 of its total potential returns per unit of risk. Avantis International Equity is currently generating about 0.24 per unit of volatility. If you would invest  1,162  in Avantis International Equity on December 2, 2024 and sell it today you would earn a total of  82.00  from holding Avantis International Equity or generate 7.06% return on investment over 90 days.

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

Oracle  vs.  Avantis International Equity

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 quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Avantis International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Avantis International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and Avantis International

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

The idea behind Oracle and Avantis International Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.