Correlation Between Okta and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Okta and FuelCell Energy 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 FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and FuelCell Energy, you can compare the effects of market volatilities on Okta and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and FuelCell Energy.
Diversification Opportunities for Okta and FuelCell Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Okta and FuelCell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Okta i.e., Okta and FuelCell Energy go up and down completely randomly.
Pair Corralation between Okta and FuelCell Energy
Given the investment horizon of 90 days Okta Inc is expected to generate 0.14 times more return on investment than FuelCell Energy. However, Okta Inc is 6.95 times less risky than FuelCell Energy. It trades about 0.13 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.01 per unit of risk. If you would invest 7,325 in Okta Inc on August 29, 2024 and sell it today you would earn a total of 358.00 from holding Okta Inc or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. FuelCell Energy
Performance |
| Timeline |
| Okta Inc |
| FuelCell Energy |
Okta and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and FuelCell Energy
The main advantage of trading using opposite Okta and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.The idea behind Okta Inc and FuelCell Energy 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.| FuelCell Energy vs. InterContinental Hotels Group | FuelCell Energy vs. Alfa Financial Software | FuelCell Energy vs. PPHE Hotel Group | FuelCell Energy vs. Iron Mountain |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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