Correlation Between Oracle and Microsoft
Can any of the company-specific risk be diversified away by investing in both Oracle and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Microsoft, you can compare the effects of market volatilities on Oracle and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Microsoft.
Diversification Opportunities for Oracle and Microsoft
Pay attention - limited upside
The 3 months correlation between Oracle and Microsoft is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Oracle i.e., Oracle and Microsoft go up and down completely randomly.
Pair Corralation between Oracle and Microsoft
If you would invest (100.00) in Oracle on December 7, 2024 and sell it today you would earn a total of 100.00 from holding Oracle or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Oracle vs. Microsoft
Performance |
| Timeline |
| Oracle |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Microsoft |
Oracle and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and Microsoft
The main advantage of trading using opposite Oracle and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| Oracle vs. Take Two Interactive Software | Oracle vs. Tyson Foods | Oracle vs. Spotify Technology SA | Oracle vs. United Natural Foods, |
| Microsoft vs. SSC Technologies Holdings, | Microsoft vs. Take Two Interactive Software | Microsoft vs. NXP Semiconductors NV | Microsoft vs. Cognizant Technology Solutions |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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