Correlation Between Oracle and Great West

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Can any of the company-specific risk be diversified away by investing in both Oracle and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Great West E Strategies, you can compare the effects of market volatilities on Oracle and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Great West.

Diversification Opportunities for Oracle and Great West

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Oracle and Great is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West E 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West E has no effect on the direction of Oracle i.e., Oracle and Great West go up and down completely randomly.

Pair Corralation between Oracle and Great West

Given the investment horizon of 90 days Oracle is expected to generate 13.29 times more return on investment than Great West. However, Oracle is 13.29 times more volatile than Great West E Strategies. It trades about 0.03 of its potential returns per unit of risk. Great West E Strategies is currently generating about 0.3 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Oracle  vs.  Great West E Strategies

 Performance 
       Timeline  
Oracle 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Great West E 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Great West E Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oracle and Great West Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oracle and Great West

The main advantage of trading using opposite Oracle and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West's long position.
The idea behind Oracle and Great West E Strategies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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