Correlation Between Oracle and Global Healthcare
Can any of the company-specific risk be diversified away by investing in both Oracle and Global Healthcare 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 Global Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Global Healthcare REIT, you can compare the effects of market volatilities on Oracle and Global Healthcare 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 Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Global Healthcare.
Diversification Opportunities for Oracle and Global Healthcare
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oracle and Global is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Global Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare REIT 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 Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare REIT has no effect on the direction of Oracle i.e., Oracle and Global Healthcare go up and down completely randomly.
Pair Corralation between Oracle and Global Healthcare
Given the investment horizon of 90 days Oracle is expected to under-perform the Global Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Oracle is 2.93 times less risky than Global Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The Global Healthcare REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 188.00 in Global Healthcare REIT on December 28, 2024 and sell it today you would earn a total of 32.00 from holding Global Healthcare REIT or generate 17.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Oracle vs. Global Healthcare REIT
Performance |
Timeline |
Oracle |
Global Healthcare REIT |
Oracle and Global Healthcare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oracle and Global Healthcare
The main advantage of trading using opposite Oracle and Global Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Global Healthcare 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 Global Healthcare will offset losses from the drop in Global Healthcare's long position.Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Adobe Systems Incorporated |
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Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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