Correlation Between Oracle and Aeva Technologies

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

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

Diversification Opportunities for Oracle and Aeva Technologies

-0.11

Correlation Coefficient

Oracle  Aeva Technologies

Good diversification

The 3 months correlation between Oracle and Aeva is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Aeva Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeva Technologies 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 Aeva Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeva Technologies has no effect on the direction of Oracle i.e., Oracle and Aeva Technologies go up and down completely randomly.

Pair Corralation between Oracle and Aeva Technologies

Given the investment horizon of 90 days Oracle is expected to generate 0.31 times more return on investment than Aeva Technologies. However, Oracle is 3.2 times less risky than Aeva Technologies. It trades about 0.07 of its potential returns per unit of risk. Aeva Technologies is currently generating about -0.02 per unit of risk. If you would invest  7,069  in Oracle on February 26, 2024 and sell it today you would earn a total of  5,222  from holding Oracle or generate 73.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Aeva Technologies

Oracle

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Aeva Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeva Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Oracle and Aeva Technologies

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

The idea behind Oracle and Aeva Technologies 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.