Correlation Between Okta and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Okta and Macquarie Group 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 Macquarie Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Macquarie Group Limited, you can compare the effects of market volatilities on Okta and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Macquarie Group.
Diversification Opportunities for Okta and Macquarie Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Okta and Macquarie is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Okta i.e., Okta and Macquarie Group go up and down completely randomly.
Pair Corralation between Okta and Macquarie Group
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Macquarie Group. In addition to that, Okta is 1.78 times more volatile than Macquarie Group Limited. It trades about -0.01 of its total potential returns per unit of risk. Macquarie Group Limited is currently generating about 0.08 per unit of volatility. If you would invest 10,727 in Macquarie Group Limited on August 25, 2024 and sell it today you would earn a total of 3,269 from holding Macquarie Group Limited or generate 30.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.28% |
| Values | Daily Returns |
Okta Inc vs. Macquarie Group Limited
Performance |
| Timeline |
| Okta Inc |
| Macquarie Group |
Okta and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Macquarie Group
The main advantage of trading using opposite Okta and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.The idea behind Okta Inc and Macquarie Group Limited 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.| Macquarie Group vs. Gruppo Mutuionline SpA | Macquarie Group vs. The Hanover Insurance | Macquarie Group vs. Insurance Australia Group | Macquarie Group vs. MUTUIONLINE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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