Correlation Between Oracle and Xtra Gold
Can any of the company-specific risk be diversified away by investing in both Oracle and Xtra Gold 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 Xtra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Xtra Gold Resources Corp, you can compare the effects of market volatilities on Oracle and Xtra Gold 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 Xtra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Xtra Gold.
Diversification Opportunities for Oracle and Xtra Gold
Very poor diversification
The 3 months correlation between Oracle and Xtra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Xtra Gold Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Gold Resources 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 Xtra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Gold Resources has no effect on the direction of Oracle i.e., Oracle and Xtra Gold go up and down completely randomly.
Pair Corralation between Oracle and Xtra Gold
Given the investment horizon of 90 days Oracle is expected to generate 2.0 times less return on investment than Xtra Gold. But when comparing it to its historical volatility, Oracle is 1.29 times less risky than Xtra Gold. It trades about 0.17 of its potential returns per unit of risk. Xtra Gold Resources Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 157.00 in Xtra Gold Resources Corp on September 4, 2024 and sell it today you would earn a total of 24.00 from holding Xtra Gold Resources Corp or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oracle vs. Xtra Gold Resources Corp
Performance |
| Timeline |
| Oracle |
| Xtra Gold Resources |
Oracle and Xtra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Xtra Gold
The main advantage of trading using opposite Oracle and Xtra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Xtra Gold 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 Xtra Gold will offset losses from the drop in Xtra Gold's long position.| Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
| Xtra Gold vs. Loncor Resources | Xtra Gold vs. Century Global Commodities | Xtra Gold vs. Grosvenor Resource Corp | Xtra Gold vs. Quartz Mountain Resources |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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