Correlation Between Oracle and TD Active

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

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

Diversification Opportunities for Oracle and TD Active

0.46

Correlation Coefficient

Oracle  TD Active

Very weak diversification

The 3 months correlation between Oracle and TPRF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and TD Active Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Preferred 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Preferred has no effect on the direction of Oracle i.e., Oracle and TD Active go up and down completely randomly.

Pair Corralation between Oracle and TD Active

Given the investment horizon of 90 days Oracle is expected to under-perform the TD Active. In addition to that, Oracle is 10.02 times more volatile than TD Active Preferred. It trades about -0.05 of its total potential returns per unit of risk. TD Active Preferred is currently generating about 0.06 per unit of volatility. If you would invest  1,104  in TD Active Preferred on December 29, 2024 and sell it today you would earn a total of  14.00  from holding TD Active Preferred or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Oracle  vs.  TD Active Preferred

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 latest abnormal performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

TD Active Preferred

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TD Active Preferred are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, TD Active is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oracle and TD Active

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

The idea behind Oracle and TD Active Preferred 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.