Correlation Between Oracle and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Oracle and F5 Networks 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 F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oracle and F5 Networks, you can compare the effects of market volatilities on Oracle and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and F5 Networks.
Diversification Opportunities for Oracle and F5 Networks
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oracle and FFIV is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Oracle i.e., Oracle and F5 Networks go up and down completely randomly.
Pair Corralation between Oracle and F5 Networks
Given the investment horizon of 90 days Oracle is expected to generate 1.59 times more return on investment than F5 Networks. However, Oracle is 1.59 times more volatile than F5 Networks. It trades about 0.06 of its potential returns per unit of risk. F5 Networks is currently generating about 0.07 per unit of risk. If you would invest 8,580 in Oracle on January 24, 2024 and sell it today you would earn a total of 2,929 from holding Oracle or generate 34.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oracle vs. F5 Networks
Performance |
| Timeline |
| Oracle |
| F5 Networks |
Oracle and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oracle and F5 Networks
The main advantage of trading using opposite Oracle and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Oracle vs. Block Inc | Oracle vs. Adobe Systems Incorporated | Oracle vs. Crowdstrike Holdings | Oracle vs. Cloudflare |
| F5 Networks vs. Desktop Metal | F5 Networks vs. Fabrinet | F5 Networks vs. Kimball Electronics | F5 Networks vs. Knowles Cor |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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