Correlation Between Oracle and Rite Aid
Can any of the company-specific risk be diversified away by investing in both Oracle and Rite Aid 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 Rite Aid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Rite Aid, you can compare the effects of market volatilities on Oracle and Rite Aid 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 Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Rite Aid.
Diversification Opportunities for Oracle and Rite Aid
Pay attention - limited upside
The 3 months correlation between Oracle and Rite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid 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 Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Oracle i.e., Oracle and Rite Aid go up and down completely randomly.
Pair Corralation between Oracle and Rite Aid
Given the investment horizon of 90 days Oracle is expected to generate 0.27 times more return on investment than Rite Aid. However, Oracle is 3.72 times less risky than Rite Aid. It trades about 0.1 of its potential returns per unit of risk. Rite Aid is currently generating about -0.04 per unit of risk. If you would invest 7,791 in Oracle on September 5, 2024 and sell it today you would earn a total of 10,498 from holding Oracle or generate 134.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Oracle vs. Rite Aid
Performance |
| Timeline |
| Oracle |
| Rite Aid |
Oracle and Rite Aid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Rite Aid
The main advantage of trading using opposite Oracle and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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