Correlation Between Oracle and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Oracle and Franklin Federal 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 Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Franklin Federal Limited Term, you can compare the effects of market volatilities on Oracle and Franklin Federal 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 Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Franklin Federal.
Diversification Opportunities for Oracle and Franklin Federal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oracle and Franklin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim 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 Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Oracle i.e., Oracle and Franklin Federal go up and down completely randomly.
Pair Corralation between Oracle and Franklin Federal
Given the investment horizon of 90 days Oracle is expected to generate 17.71 times more return on investment than Franklin Federal. However, Oracle is 17.71 times more volatile than Franklin Federal Limited Term. It trades about 0.16 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.1 per unit of risk. If you would invest 16,102 in Oracle on September 12, 2024 and sell it today you would earn a total of 2,943 from holding Oracle or generate 18.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Oracle vs. Franklin Federal Limited Term
Performance |
Timeline |
Oracle |
Franklin Federal Lim |
Oracle and Franklin Federal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oracle and Franklin Federal
The main advantage of trading using opposite Oracle and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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