Correlation Between Oracle and William Blair

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

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

Diversification Opportunities for Oracle and William Blair

0.77

Correlation Coefficient

Oracle  William Blair

Poor diversification

The 3 months correlation between Oracle and William is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and William Blair Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Oracle i.e., Oracle and William Blair go up and down completely randomly.

Pair Corralation between Oracle and William Blair

Given the investment horizon of 90 days Oracle is expected to generate 1.83 times more return on investment than William Blair. However, Oracle is 1.83 times more volatile than William Blair Small. It trades about 0.22 of its potential returns per unit of risk. William Blair Small is currently generating about 0.17 per unit of risk. If you would invest  13,919  in Oracle on September 3, 2024 and sell it today you would earn a total of  4,565  from holding Oracle or generate 32.8% return on investment over 90 days.

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

Oracle  vs.  William Blair Small

Oracle

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

William Blair Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oracle and William Blair

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

The idea behind Oracle and William Blair Small 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.