Correlation Between Oracle and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Oracle and Centrica PLC 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 Centrica PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Centrica PLC ADR, you can compare the effects of market volatilities on Oracle and Centrica PLC 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 Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Centrica PLC.
Diversification Opportunities for Oracle and Centrica PLC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oracle and Centrica is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Centrica PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica PLC ADR 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 Centrica PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica PLC ADR has no effect on the direction of Oracle i.e., Oracle and Centrica PLC go up and down completely randomly.
Pair Corralation between Oracle and Centrica PLC
Given the investment horizon of 90 days Oracle is expected to generate 0.92 times more return on investment than Centrica PLC. However, Oracle is 1.09 times less risky than Centrica PLC. It trades about 0.1 of its potential returns per unit of risk. Centrica PLC ADR is currently generating about 0.05 per unit of risk. If you would invest 7,839 in Oracle on September 3, 2024 and sell it today you would earn a total of 10,645 from holding Oracle or generate 135.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oracle vs. Centrica PLC ADR
Performance |
| Timeline |
| Oracle |
| Centrica PLC ADR |
Oracle and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Centrica PLC
The main advantage of trading using opposite Oracle and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Centrica PLC 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 Centrica PLC will offset losses from the drop in Centrica PLC's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Centrica PLC vs. NRG Energy | Centrica PLC vs. TransAlta Corp | Centrica PLC vs. Kenon Holdings | Centrica PLC vs. Pampa Energia SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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