Correlation Between Oracle and NATIONAL

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

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

Diversification Opportunities for Oracle and NATIONAL

-0.55

Correlation Coefficient

Oracle  NATIONAL

Excellent diversification

The 3 months correlation between Oracle and NATIONAL is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS 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 NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of Oracle i.e., Oracle and NATIONAL go up and down completely randomly.

Pair Corralation between Oracle and NATIONAL

Given the investment horizon of 90 days Oracle is expected to under-perform the NATIONAL. In addition to that, Oracle is 2.13 times more volatile than NATIONAL RURAL UTILS. It trades about -0.05 of its total potential returns per unit of risk. NATIONAL RURAL UTILS is currently generating about 0.07 per unit of volatility. If you would invest  9,280  in NATIONAL RURAL UTILS on December 1, 2024 and sell it today you would earn a total of  91.00  from holding NATIONAL RURAL UTILS or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Oracle  vs.  NATIONAL RURAL UTILS

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.

NATIONAL RURAL UTILS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL RURAL UTILS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NATIONAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and NATIONAL

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

The idea behind Oracle and NATIONAL RURAL UTILS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.