Correlation Between Verint Systems and Oracle

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

By analyzing existing cross correlation between Verint Systems and Oracle, you can compare the effects of market volatilities on Verint Systems and Oracle 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 Verint Systems with a short position of Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verint Systems and Oracle.

Diversification Opportunities for Verint Systems and Oracle

-0.64

Correlation Coefficient

Verint Systems  Oracle

Excellent diversification

The 3 months correlation between Verint and Oracle is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Verint Systems and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle and Verint Systems 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 Verint Systems are associated (or correlated) with Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Verint Systems i.e., Verint Systems and Oracle go up and down completely randomly.

Pair Corralation between Verint Systems and Oracle

Given the investment horizon of 90 days Verint Systems is expected to generate 1.3 times more return on investment than Oracle. However, Verint Systems is 1.3 times more volatile than Oracle. It trades about 0.33 of its potential returns per unit of risk. Oracle is currently generating about 0.25 per unit of risk. If you would invest  2,130  in Verint Systems on September 1, 2024 and sell it today you would earn a total of  390.00  from holding Verint Systems or generate 18.31% return on investment over 90 days.

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

Verint Systems  vs.  Oracle

Verint Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verint Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Verint Systems and Oracle

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

The idea behind Verint Systems and Oracle 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.