Correlation Between Oracle and Entree Resources

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

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

Diversification Opportunities for Oracle and Entree Resources

0.58

Correlation Coefficient

Oracle  Entree Resources

Very weak diversification

The 3 months correlation between Oracle and Entree is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Entree Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entree Resources 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 Entree Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entree Resources has no effect on the direction of Oracle i.e., Oracle and Entree Resources go up and down completely randomly.

Pair Corralation between Oracle and Entree Resources

Given the investment horizon of 90 days Oracle is expected to generate 1.1 times more return on investment than Entree Resources. However, Oracle is 1.1 times more volatile than Entree Resources. It trades about -0.05 of its potential returns per unit of risk. Entree Resources is currently generating about -0.07 per unit of risk. If you would invest  16,648  in Oracle on December 29, 2024 and sell it today you would lose (2,070) from holding Oracle or give up 12.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Oracle  vs.  Entree Resources

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 latest abnormal performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Entree Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entree Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Oracle and Entree Resources

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

The idea behind Oracle and Entree Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..