Correlation Between Oracle and PIMCO Global

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

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

Diversification Opportunities for Oracle and PIMCO Global

0.54

Correlation Coefficient

Oracle  PIMCO Global

Very weak diversification

The 3 months correlation between Oracle and PIMCO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and PIMCO Global Incme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Global Incme 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 PIMCO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Global Incme has no effect on the direction of Oracle i.e., Oracle and PIMCO Global go up and down completely randomly.

Pair Corralation between Oracle and PIMCO Global

Given the investment horizon of 90 days Oracle is expected to generate 3.22 times more return on investment than PIMCO Global. However, Oracle is 3.22 times more volatile than PIMCO Global Incme. It trades about 0.19 of its potential returns per unit of risk. PIMCO Global Incme is currently generating about 0.03 per unit of risk. If you would invest  14,229  in Oracle on September 5, 2024 and sell it today you would earn a total of  4,060  from holding Oracle or generate 28.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Oracle  vs.  PIMCO Global Incme

Oracle

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 15 (%) 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.

PIMCO Global Incme

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Global Incme are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward indicators, PIMCO Global 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 PIMCO Global

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

The idea behind Oracle and PIMCO Global Incme 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.