Correlation Between Oracle and United States

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

By analyzing existing cross correlation between Oracle and United States 12, you can compare the effects of market volatilities on Oracle and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and United States.

Diversification Opportunities for Oracle and United States

-0.44

Correlation Coefficient

Oracle  United States

Very good diversification

The 3 months correlation between Oracle and United is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of Oracle i.e., Oracle and United States go up and down completely randomly.

Pair Corralation between Oracle and United States

Given the investment horizon of 90 days Oracle is expected to under-perform the United States. In addition to that, Oracle is 1.25 times more volatile than United States 12. It trades about -0.05 of its total potential returns per unit of risk. United States 12 is currently generating about 0.13 per unit of volatility. If you would invest  828.00  in United States 12 on December 28, 2024 and sell it today you would earn a total of  162.00  from holding United States 12 or generate 19.57% return on investment over 90 days.

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

Oracle  vs.  United States 12

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.

United States 12

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United States 12 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, United States disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and United States

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

The idea behind Oracle and United States 12 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.