Correlation Between Oracle and Transamerica Cleartrack

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

By analyzing existing cross correlation between Oracle and Transamerica Cleartrack 2040, you can compare the effects of market volatilities on Oracle and Transamerica Cleartrack 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 Transamerica Cleartrack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Transamerica Cleartrack.

Diversification Opportunities for Oracle and Transamerica Cleartrack

0.57

Correlation Coefficient

Oracle  Transamerica Cleartrack

Very weak diversification

The 3 months correlation between Oracle and Transamerica is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Transamerica Cleartrack 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Cleartrack 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 Transamerica Cleartrack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Cleartrack has no effect on the direction of Oracle i.e., Oracle and Transamerica Cleartrack go up and down completely randomly.

Pair Corralation between Oracle and Transamerica Cleartrack

Given the investment horizon of 90 days Oracle is expected to generate 3.43 times more return on investment than Transamerica Cleartrack. However, Oracle is 3.43 times more volatile than Transamerica Cleartrack 2040. It trades about 0.08 of its potential returns per unit of risk. Transamerica Cleartrack 2040 is currently generating about 0.09 per unit of risk. If you would invest  8,274  in Oracle on December 2, 2024 and sell it today you would earn a total of  8,332  from holding Oracle or generate 100.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Transamerica Cleartrack 2040

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 quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Transamerica Cleartrack

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Cleartrack 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transamerica Cleartrack is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and Transamerica Cleartrack

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

The idea behind Oracle and Transamerica Cleartrack 2040 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.