Correlation Between Oracle and VanEck Gold
Can any of the company-specific risk be diversified away by investing in both Oracle and VanEck Gold 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 VanEck Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and VanEck Gold Miners, you can compare the effects of market volatilities on Oracle and VanEck Gold 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 VanEck Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and VanEck Gold.
Diversification Opportunities for Oracle and VanEck Gold
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oracle and VanEck is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and VanEck Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Gold Miners 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 VanEck Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Gold Miners has no effect on the direction of Oracle i.e., Oracle and VanEck Gold go up and down completely randomly.
Pair Corralation between Oracle and VanEck Gold
Given the investment horizon of 90 days Oracle is expected to generate 1.06 times more return on investment than VanEck Gold. However, Oracle is 1.06 times more volatile than VanEck Gold Miners. It trades about 0.1 of its potential returns per unit of risk. VanEck Gold Miners is currently generating about 0.03 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 Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Oracle vs. VanEck Gold Miners
Performance |
| Timeline |
| Oracle |
| VanEck Gold Miners |
Oracle and VanEck Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and VanEck Gold
The main advantage of trading using opposite Oracle and VanEck Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, VanEck Gold 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 VanEck Gold will offset losses from the drop in VanEck Gold's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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