Correlation Between Home Depot and Okta
Can any of the company-specific risk be diversified away by investing in both Home Depot and Okta 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 Home Depot and Okta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Okta Inc, you can compare the effects of market volatilities on Home Depot and Okta 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 Home Depot with a short position of Okta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Okta.
Diversification Opportunities for Home Depot and Okta
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Okta is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Home Depot 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 The Home Depot are associated (or correlated) with Okta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okta Inc has no effect on the direction of Home Depot i.e., Home Depot and Okta go up and down completely randomly.
Pair Corralation between Home Depot and Okta
Assuming the 90 days trading horizon Home Depot is expected to generate 1.18 times less return on investment than Okta. But when comparing it to its historical volatility, The Home Depot is 1.78 times less risky than Okta. It trades about 0.06 of its potential returns per unit of risk. Okta Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,662 in Okta Inc on September 3, 2024 and sell it today you would earn a total of 658.00 from holding Okta Inc or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Home Depot vs. Okta Inc
Performance |
| Timeline |
| Home Depot |
| Okta Inc |
Home Depot and Okta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Okta
The main advantage of trading using opposite Home Depot and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Okta 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 Okta will offset losses from the drop in Okta's long position.| Home Depot vs. Planet Fitness | Home Depot vs. Mitsubishi UFJ Financial | Home Depot vs. Credit Acceptance | Home Depot vs. Align Technology |
| Okta vs. Marvell Technology | Okta vs. The Home Depot | Okta vs. Brpr Corporate Offices | Okta vs. Lupatech SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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