Correlation Between Okta and Alger Emerging
Can any of the company-specific risk be diversified away by investing in both Okta and Alger Emerging 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 Alger Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Alger Emerging Markets, you can compare the effects of market volatilities on Okta and Alger Emerging 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 Alger Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Alger Emerging.
Diversification Opportunities for Okta and Alger Emerging
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Alger is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Alger Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Emerging Markets 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 Alger Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Emerging Markets has no effect on the direction of Okta i.e., Okta and Alger Emerging go up and down completely randomly.
Pair Corralation between Okta and Alger Emerging
Given the investment horizon of 90 days Okta Inc is expected to generate 3.0 times more return on investment than Alger Emerging. However, Okta is 3.0 times more volatile than Alger Emerging Markets. It trades about 0.03 of its potential returns per unit of risk. Alger Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 6,194 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 1,463 from holding Okta Inc or generate 23.62% 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. Alger Emerging Markets
Performance |
| Timeline |
| Okta Inc |
| Alger Emerging Markets |
Okta and Alger Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Alger Emerging
The main advantage of trading using opposite Okta and Alger Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Alger Emerging 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 Alger Emerging will offset losses from the drop in Alger Emerging's long position.The idea behind Okta Inc and Alger Emerging Markets 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.| Alger Emerging vs. Alger Midcap Growth | Alger Emerging vs. Alger Midcap Growth | Alger Emerging vs. Alger Mid Cap | Alger Emerging vs. Alger Small Cap |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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