Correlation Between Oracle and Next Generation
Can any of the company-specific risk be diversified away by investing in both Oracle and Next Generation 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 Next Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Next Generation Management, you can compare the effects of market volatilities on Oracle and Next Generation 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 Next Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Next Generation.
Diversification Opportunities for Oracle and Next Generation
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oracle and Next is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Next Generation Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Generation Mana 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 Next Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Generation Mana has no effect on the direction of Oracle i.e., Oracle and Next Generation go up and down completely randomly.
Pair Corralation between Oracle and Next Generation
Given the investment horizon of 90 days Oracle is expected to generate 0.16 times more return on investment than Next Generation. However, Oracle is 6.39 times less risky than Next Generation. It trades about 0.17 of its potential returns per unit of risk. Next Generation Management is currently generating about -0.17 per unit of risk. If you would invest 16,959 in Oracle on September 4, 2024 and sell it today you would earn a total of 1,182 from holding Oracle or generate 6.97% 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. Next Generation Management
Performance |
| Timeline |
| Oracle |
| Next Generation Mana |
Oracle and Next Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Next Generation
The main advantage of trading using opposite Oracle and Next Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Next Generation 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 Next Generation will offset losses from the drop in Next Generation'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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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