Correlation Between Okta and Moderna
Can any of the company-specific risk be diversified away by investing in both Okta and Moderna 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 Moderna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Moderna, you can compare the effects of market volatilities on Okta and Moderna 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 Moderna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Moderna.
Diversification Opportunities for Okta and Moderna
Modest diversification
The 3 months correlation between Okta and Moderna is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna 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 Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of Okta i.e., Okta and Moderna go up and down completely randomly.
Pair Corralation between Okta and Moderna
Given the investment horizon of 90 days Okta Inc is expected to generate 0.69 times more return on investment than Moderna. However, Okta Inc is 1.46 times less risky than Moderna. It trades about 0.0 of its potential returns per unit of risk. Moderna is currently generating about -0.08 per unit of risk. If you would invest 8,490 in Okta Inc on August 29, 2024 and sell it today you would lose (807.00) from holding Okta Inc or give up 9.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.58% |
| Values | Daily Returns |
Okta Inc vs. Moderna
Performance |
| Timeline |
| Okta Inc |
| Moderna |
Okta and Moderna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Moderna
The main advantage of trading using opposite Okta and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Moderna 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 Moderna will offset losses from the drop in Moderna's long position.The idea behind Okta Inc and Moderna 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.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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