Correlation Between Oracle and PacifiCorp
Can any of the company-specific risk be diversified away by investing in both Oracle and PacifiCorp 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 PacifiCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and PacifiCorp, you can compare the effects of market volatilities on Oracle and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and PacifiCorp.
Diversification Opportunities for Oracle and PacifiCorp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oracle and PacifiCorp is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Oracle i.e., Oracle and PacifiCorp go up and down completely randomly.
Pair Corralation between Oracle and PacifiCorp
Given the investment horizon of 90 days Oracle is expected to generate 0.08 times more return on investment than PacifiCorp. However, Oracle is 12.02 times less risky than PacifiCorp. It trades about -0.07 of its potential returns per unit of risk. PacifiCorp is currently generating about -0.17 per unit of risk. If you would invest 16,648 in Oracle on December 30, 2024 and sell it today you would lose (2,561) from holding Oracle or give up 15.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 17.74% |
Values | Daily Returns |
Oracle vs. PacifiCorp
Performance |
Timeline |
Oracle |
PacifiCorp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Oracle and PacifiCorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oracle and PacifiCorp
The main advantage of trading using opposite Oracle and PacifiCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, PacifiCorp 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 PacifiCorp will offset losses from the drop in PacifiCorp'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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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