Correlation Between Oracle and Southern California
Can any of the company-specific risk be diversified away by investing in both Oracle and Southern California 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 Southern California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Southern California Gas, you can compare the effects of market volatilities on Oracle and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Southern California.
Diversification Opportunities for Oracle and Southern California
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Oracle and Southern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Southern California Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California Gas 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California Gas has no effect on the direction of Oracle i.e., Oracle and Southern California go up and down completely randomly.
Pair Corralation between Oracle and Southern California
Given the investment horizon of 90 days Oracle is expected to generate 0.55 times more return on investment than Southern California. However, Oracle is 1.81 times less risky than Southern California. It trades about 0.1 of its potential returns per unit of risk. Southern California Gas is currently generating about 0.02 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 | Insignificant |
| Accuracy | 89.49% |
| Values | Daily Returns |
Oracle vs. Southern California Gas
Performance |
| Timeline |
| Oracle |
| Southern California Gas |
Oracle and Southern California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Southern California
The main advantage of trading using opposite Oracle and Southern California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Southern California 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 Southern California will offset losses from the drop in Southern California's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Southern California vs. Dynagas LNG Partners | Southern California vs. GasLog Partners LP | Southern California vs. GasLog Partners LP | Southern California vs. Genesis Energy LP |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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