Correlation Between Oracle and Marks
Can any of the company-specific risk be diversified away by investing in both Oracle and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Marks and Spencer, you can compare the effects of market volatilities on Oracle and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Marks.
Diversification Opportunities for Oracle and Marks
Poor diversification
The 3 months correlation between Oracle and Marks is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Oracle i.e., Oracle and Marks go up and down completely randomly.
Pair Corralation between Oracle and Marks
Given the investment horizon of 90 days Oracle is expected to generate 1.16 times more return on investment than Marks. However, Oracle is 1.16 times more volatile than Marks and Spencer. It trades about 0.15 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.12 per unit of risk. If you would invest 12,528 in Oracle on September 5, 2024 and sell it today you would earn a total of 5,761 from holding Oracle or generate 45.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Oracle vs. Marks and Spencer
Performance |
| Timeline |
| Oracle |
| Marks and Spencer |
Oracle and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Marks
The main advantage of trading using opposite Oracle and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Marks vs. CarsalesCom | Marks vs. MAVEN WIRELESS SWEDEN | Marks vs. Entravision Communications | Marks vs. TRADEGATE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |