Correlation Between Oracle and Beacon
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By analyzing existing cross correlation between Oracle and Beacon Roofing Supply, you can compare the effects of market volatilities on Oracle and Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Beacon.
Diversification Opportunities for Oracle and Beacon
Good diversification
The 3 months correlation between Oracle and Beacon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Oracle i.e., Oracle and Beacon go up and down completely randomly.
Pair Corralation between Oracle and Beacon
Given the investment horizon of 90 days Oracle is expected to generate 3.85 times more return on investment than Beacon. However, Oracle is 3.85 times more volatile than Beacon Roofing Supply. It trades about 0.1 of its potential returns per unit of risk. Beacon Roofing Supply is currently generating about -0.08 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 1,756 from holding Oracle or generate 10.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 75.0% |
Values | Daily Returns |
Oracle vs. Beacon Roofing Supply
Performance |
Timeline |
Oracle |
Beacon Roofing Supply |
Oracle and Beacon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oracle and Beacon
The main advantage of trading using opposite Oracle and Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Beacon 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 Beacon will offset losses from the drop in Beacon's long position.Oracle vs. Palo Alto Networks | Oracle vs. Crowdstrike Holdings | Oracle vs. Microsoft | Oracle vs. Block Inc |
Beacon vs. Dennys Corp | Beacon vs. The Wendys Co | Beacon vs. Sellas Life Sciences | Beacon vs. Meli Hotels International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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