Correlation Between Oracle and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Oracle and Verizon Communications 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 Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Verizon Communications, you can compare the effects of market volatilities on Oracle and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Verizon Communications.
Diversification Opportunities for Oracle and Verizon Communications
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oracle and Verizon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Oracle i.e., Oracle and Verizon Communications go up and down completely randomly.
Pair Corralation between Oracle and Verizon Communications
Assuming the 90 days trading horizon Oracle is expected to generate 1.14 times more return on investment than Verizon Communications. However, Oracle is 1.14 times more volatile than Verizon Communications. It trades about 0.11 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.11 per unit of risk. If you would invest 194,722 in Oracle on September 4, 2024 and sell it today you would earn a total of 176,028 from holding Oracle or generate 90.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.65% |
| Values | Daily Returns |
Oracle vs. Verizon Communications
Performance |
| Timeline |
| Oracle |
| Verizon Communications |
Oracle and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Verizon Communications
The main advantage of trading using opposite Oracle and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| Oracle vs. Verizon Communications | Oracle vs. KB Home | Oracle vs. DXC Technology | Oracle vs. Monster Beverage Corp |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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