Correlation Between Oracle and IShares Govt

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

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

Diversification Opportunities for Oracle and IShares Govt

-0.22

Correlation Coefficient

Oracle  IShares Govt

Very good diversification

The 3 months correlation between Oracle and IShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and iShares Govt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Govt Bond 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 IShares Govt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Govt Bond has no effect on the direction of Oracle i.e., Oracle and IShares Govt go up and down completely randomly.

Pair Corralation between Oracle and IShares Govt

Given the investment horizon of 90 days Oracle is expected to under-perform the IShares Govt. In addition to that, Oracle is 10.8 times more volatile than iShares Govt Bond. It trades about -0.07 of its total potential returns per unit of risk. iShares Govt Bond is currently generating about 0.1 per unit of volatility. If you would invest  15,181  in iShares Govt Bond on December 29, 2024 and sell it today you would earn a total of  230.00  from holding iShares Govt Bond or generate 1.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.97%
Values	Daily Returns

Oracle  vs.  iShares Govt Bond

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.

iShares Govt Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Govt Bond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Govt is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Oracle and IShares Govt

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

The idea behind Oracle and iShares Govt Bond 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.