Correlation Between Oracle and Sturm Ruger

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Can any of the company-specific risk be diversified away by investing in both Oracle and Sturm Ruger 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 Sturm Ruger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and Sturm Ruger, you can compare the effects of market volatilities on Oracle and Sturm Ruger 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 Sturm Ruger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Sturm Ruger.

Diversification Opportunities for Oracle and Sturm Ruger

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Oracle and Sturm is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Sturm Ruger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturm Ruger 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 Sturm Ruger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturm Ruger has no effect on the direction of Oracle i.e., Oracle and Sturm Ruger go up and down completely randomly.

Pair Corralation between Oracle and Sturm Ruger

Given the investment horizon of 90 days Oracle is expected to generate 1.72 times more return on investment than Sturm Ruger. However, Oracle is 1.72 times more volatile than Sturm Ruger. It trades about 0.19 of its potential returns per unit of risk. Sturm Ruger is currently generating about -0.09 per unit of risk. If you would invest  14,043  in Oracle on September 4, 2024 and sell it today you would earn a total of  4,098  from holding Oracle or generate 29.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Oracle  vs.  Sturm Ruger

 Performance 
       Timeline  
Oracle 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
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.
Sturm Ruger 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Oracle and Sturm Ruger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oracle and Sturm Ruger

The main advantage of trading using opposite Oracle and Sturm Ruger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Sturm Ruger 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 Sturm Ruger will offset losses from the drop in Sturm Ruger's long position.
The idea behind Oracle and Sturm Ruger 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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