Correlation Between Oracle and Amg Timessquare

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

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

Diversification Opportunities for Oracle and Amg Timessquare

0.89

Correlation Coefficient

Oracle  Amg Timessquare

Very poor diversification

The 3 months correlation between Oracle and Amg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Amg Timessquare Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Timessquare Small 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 Amg Timessquare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Timessquare Small has no effect on the direction of Oracle i.e., Oracle and Amg Timessquare go up and down completely randomly.

Pair Corralation between Oracle and Amg Timessquare

Given the investment horizon of 90 days Oracle is expected to generate 1.24 times less return on investment than Amg Timessquare. In addition to that, Oracle is 1.76 times more volatile than Amg Timessquare Small. It trades about 0.09 of its total potential returns per unit of risk. Amg Timessquare Small is currently generating about 0.2 per unit of volatility. If you would invest  1,189  in Amg Timessquare Small on September 12, 2024 and sell it today you would earn a total of  169.00  from holding Amg Timessquare Small or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Amg Timessquare Small

Oracle

Risk-Adjusted Performance

7 of 100

Good

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.

Amg Timessquare Small

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Timessquare Small are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amg Timessquare showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oracle and Amg Timessquare

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

The idea behind Oracle and Amg Timessquare Small 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.