Correlation Between Oracle and EGPT

Can any of the company-specific risk be diversified away by investing in both Oracle and EGPT 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 EGPT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oracle and EGPT, you can compare the effects of market volatilities on Oracle and EGPT 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 EGPT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and EGPT.

Diversification Opportunities for Oracle and EGPT

-0.34

Correlation Coefficient

Oracle  EGPT

Very good diversification

The 3 months correlation between Oracle and EGPT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and EGPT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGPT 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 EGPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGPT has no effect on the direction of Oracle i.e., Oracle and EGPT go up and down completely randomly.

Pair Corralation between Oracle and EGPT

Given the investment horizon of 90 days Oracle is expected to generate 0.26 times more return on investment than EGPT. However, Oracle is 3.82 times less risky than EGPT. It trades about 0.03 of its potential returns per unit of risk. EGPT is currently generating about -0.26 per unit of risk. If you would invest  11,369  in Oracle on March 4, 2024 and sell it today you would earn a total of  350.00  from holding Oracle or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

Oracle  vs.  EGPT

Oracle

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

EGPT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EGPT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Oracle and EGPT

The main advantage of trading using opposite Oracle and EGPT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, EGPT 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 EGPT will offset losses from the drop in EGPT's long position.

The idea behind Oracle and EGPT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.