Correlation Between Okta and Telecom Italia
Can any of the company-specific risk be diversified away by investing in both Okta and Telecom Italia 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 Telecom Italia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Telecom Italia SpA, you can compare the effects of market volatilities on Okta and Telecom Italia 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 Telecom Italia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Telecom Italia.
Diversification Opportunities for Okta and Telecom Italia
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Telecom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Telecom Italia SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Italia SpA 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 Telecom Italia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Italia SpA has no effect on the direction of Okta i.e., Okta and Telecom Italia go up and down completely randomly.
Pair Corralation between Okta and Telecom Italia
Given the investment horizon of 90 days Okta is expected to generate 1.18 times less return on investment than Telecom Italia. But when comparing it to its historical volatility, Okta Inc is 1.03 times less risky than Telecom Italia. It trades about 0.02 of its potential returns per unit of risk. Telecom Italia SpA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Telecom Italia SpA on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Telecom Italia SpA or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Okta Inc vs. Telecom Italia SpA
Performance |
| Timeline |
| Okta Inc |
| Telecom Italia SpA |
Okta and Telecom Italia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Telecom Italia
The main advantage of trading using opposite Okta and Telecom Italia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Telecom Italia 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 Telecom Italia will offset losses from the drop in Telecom Italia's long position.The idea behind Okta Inc and Telecom Italia SpA 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.| Telecom Italia vs. Sunny Optical Technology | Telecom Italia vs. Microchip Technology | Telecom Italia vs. Westlake Chemical Corp | Telecom Italia vs. DXC Technology Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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