Correlation Between Oracle and Rational Strategic

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

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

Diversification Opportunities for Oracle and Rational Strategic

0.82

Correlation Coefficient

Oracle  Rational Strategic

Very poor diversification

The 3 months correlation between Oracle and RATIONAL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic 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 Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Oracle i.e., Oracle and Rational Strategic go up and down completely randomly.

Pair Corralation between Oracle and Rational Strategic

Given the investment horizon of 90 days Oracle is expected to generate 1.66 times more return on investment than Rational Strategic. However, Oracle is 1.66 times more volatile than Rational Strategic Allocation. It trades about -0.07 of its potential returns per unit of risk. Rational Strategic Allocation is currently generating about -0.13 per unit of risk. If you would invest  16,648  in Oracle on December 29, 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	Strong
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Rational Strategic Allocation

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.

Rational Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Oracle and Rational Strategic

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

The idea behind Oracle and Rational Strategic Allocation 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.