Correlation Between Oracle and North Bud

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

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

Diversification Opportunities for Oracle and North Bud

0.0

Correlation Coefficient

Oracle  North Bud

Pay attention - limited upside

The 3 months correlation between Oracle and North is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and North Bud Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Bud Farms 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 North Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Bud Farms has no effect on the direction of Oracle i.e., Oracle and North Bud go up and down completely randomly.

Pair Corralation between Oracle and North Bud

If you would invest  16,167  in Oracle on September 13, 2024 and sell it today you would earn a total of  1,691  from holding Oracle or generate 10.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Oracle  vs.  North Bud Farms

Oracle

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

North Bud Farms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Bud Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, North Bud is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oracle and North Bud

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

The idea behind Oracle and North Bud Farms 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.