Correlation Between Oracle and Entourage Health

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

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

Diversification Opportunities for Oracle and Entourage Health

-0.16

Correlation Coefficient

Oracle  Entourage Health

Good diversification

The 3 months correlation between Oracle and Entourage is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp 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 Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Oracle i.e., Oracle and Entourage Health go up and down completely randomly.

Pair Corralation between Oracle and Entourage Health

Given the investment horizon of 90 days Oracle is expected to under-perform the Entourage Health. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 4.13 times less risky than Entourage Health. The stock trades about -0.07 of its potential returns per unit of risk. The Entourage Health Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  0.63  in Entourage Health Corp on December 29, 2024 and sell it today you would lose (0.30) from holding Entourage Health Corp or give up 47.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Oracle  vs.  Entourage Health Corp

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.

Entourage Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entourage Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Oracle and Entourage Health

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

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