Correlation Between Okta and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Okta and WPG Holdings 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 WPG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and WPG Holdings, you can compare the effects of market volatilities on Okta and WPG Holdings 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 WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and WPG Holdings.
Diversification Opportunities for Okta and WPG Holdings
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and WPG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Okta i.e., Okta and WPG Holdings go up and down completely randomly.
Pair Corralation between Okta and WPG Holdings
Given the investment horizon of 90 days Okta Inc is expected to generate 9.36 times more return on investment than WPG Holdings. However, Okta is 9.36 times more volatile than WPG Holdings. It trades about 0.05 of its potential returns per unit of risk. WPG Holdings is currently generating about 0.22 per unit of risk. If you would invest 7,434 in Okta Inc on August 30, 2024 and sell it today you would earn a total of 249.00 from holding Okta Inc or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. WPG Holdings
Performance |
| Timeline |
| Okta Inc |
| WPG Holdings |
Okta and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and WPG Holdings
The main advantage of trading using opposite Okta and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' long position.The idea behind Okta Inc and WPG Holdings 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.| WPG Holdings vs. Pacific Hospital Supply | WPG Holdings vs. Professional Computer Technology | WPG Holdings vs. Far EasTone Telecommunications | WPG Holdings vs. Lian Hwa 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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