Correlation Between Oracle and Farm Pride
Can any of the company-specific risk be diversified away by investing in both Oracle and Farm Pride 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 Farm Pride into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Farm Pride Foods, you can compare the effects of market volatilities on Oracle and Farm Pride 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 Farm Pride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Farm Pride.
Diversification Opportunities for Oracle and Farm Pride
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oracle and Farm is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Farm Pride Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Pride Foods 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 Farm Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Pride Foods has no effect on the direction of Oracle i.e., Oracle and Farm Pride go up and down completely randomly.
Pair Corralation between Oracle and Farm Pride
Given the investment horizon of 90 days Oracle is expected to generate 0.34 times more return on investment than Farm Pride. However, Oracle is 2.93 times less risky than Farm Pride. It trades about 0.03 of its potential returns per unit of risk. Farm Pride Foods is currently generating about -0.05 per unit of risk. If you would invest 18,913 in Oracle on September 12, 2024 and sell it today you would earn a total of 132.00 from holding Oracle or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oracle vs. Farm Pride Foods
Performance |
| Timeline |
| Oracle |
| Farm Pride Foods |
Oracle and Farm Pride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Farm Pride
The main advantage of trading using opposite Oracle and Farm Pride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Farm Pride 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 Farm Pride will offset losses from the drop in Farm Pride's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Farm Pride vs. Medibank Private | Farm Pride vs. Kkr Credit Income | Farm Pride vs. Aurelia Metals | Farm Pride vs. Centuria Industrial Reit |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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