Correlation Between Okta and Adobe
Can any of the company-specific risk be diversified away by investing in both Okta and Adobe 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 Okta and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Adobe Inc, you can compare the effects of market volatilities on Okta and Adobe 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 Okta with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Adobe.
Diversification Opportunities for Okta and Adobe
Poor diversification
The 3 months correlation between Okta and Adobe is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and Okta 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 Okta Inc are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Okta i.e., Okta and Adobe go up and down completely randomly.
Pair Corralation between Okta and Adobe
Assuming the 90 days trading horizon Okta Inc is expected to generate 1.54 times more return on investment than Adobe. However, Okta is 1.54 times more volatile than Adobe Inc. It trades about 0.2 of its potential returns per unit of risk. Adobe Inc is currently generating about 0.14 per unit of risk. If you would invest 2,266 in Okta Inc on September 13, 2024 and sell it today you would earn a total of 317.00 from holding Okta Inc or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Adobe Inc
Performance |
| Timeline |
| Okta Inc |
| Adobe Inc |
Okta and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Adobe
The main advantage of trading using opposite Okta and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.| Okta vs. Brpr Corporate Offices | Okta vs. CM Hospitalar SA | Okta vs. Nordon Indstrias Metalrgicas | Okta vs. Tyson Foods |
| Adobe vs. Lloyds Banking Group | Adobe vs. Ross Stores | Adobe vs. Bread Financial Holdings | Adobe vs. Tyson Foods |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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