Correlation Between Oracle and Oppenheimer Gold

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

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

Diversification Opportunities for Oracle and Oppenheimer Gold

0.33

Correlation Coefficient

Oracle  Oppenheimer Gold

Weak diversification

The 3 months correlation between Oracle and Oppenheimer is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Oppenheimer Gold Spec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Gold Spec 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 Oppenheimer Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Gold Spec has no effect on the direction of Oracle i.e., Oracle and Oppenheimer Gold go up and down completely randomly.

Pair Corralation between Oracle and Oppenheimer Gold

Given the investment horizon of 90 days Oracle is expected to generate 1.23 times more return on investment than Oppenheimer Gold. However, Oracle is 1.23 times more volatile than Oppenheimer Gold Spec. It trades about 0.22 of its potential returns per unit of risk. Oppenheimer Gold Spec is currently generating about 0.08 per unit of risk. If you would invest  13,919  in Oracle on September 3, 2024 and sell it today you would earn a total of  4,565  from holding Oracle or generate 32.8% 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.  Oppenheimer Gold Spec

Oracle

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Oppenheimer Gold Spec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Gold Spec are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oppenheimer Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Oracle and Oppenheimer Gold

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

The idea behind Oracle and Oppenheimer Gold Spec 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.