Correlation Between Oracle and Calvert Bond

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

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

Diversification Opportunities for Oracle and Calvert Bond

-0.71

Correlation Coefficient

Oracle  Calvert Bond

Pay attention - limited upside

The 3 months correlation between Oracle and Calvert is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Calvert Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Bond 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 Calvert Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Bond has no effect on the direction of Oracle i.e., Oracle and Calvert Bond go up and down completely randomly.

Pair Corralation between Oracle and Calvert Bond

Given the investment horizon of 90 days Oracle is expected to generate 5.0 times more return on investment than Calvert Bond. However, Oracle is 5.0 times more volatile than Calvert Bond Fund. It trades about 0.09 of its potential returns per unit of risk. Calvert Bond Fund is currently generating about 0.06 per unit of risk. If you would invest  7,867  in Oracle on September 13, 2024 and sell it today you would earn a total of  9,841  from holding Oracle or generate 125.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Oracle  vs.  Calvert Bond Fund

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 abnormal fundamental indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Calvert Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Calvert Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and Calvert Bond

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

The idea behind Oracle and Calvert Bond Fund 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.