Correlation Between Okta and Acreage Holdings
Can any of the company-specific risk be diversified away by investing in both Okta and Acreage 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 Acreage 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 Acreage Holdings, you can compare the effects of market volatilities on Okta and Acreage 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 Acreage Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Acreage Holdings.
Diversification Opportunities for Okta and Acreage Holdings
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Acreage is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Acreage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acreage 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 Acreage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acreage Holdings has no effect on the direction of Okta i.e., Okta and Acreage Holdings go up and down completely randomly.
Pair Corralation between Okta and Acreage Holdings
Given the investment horizon of 90 days Okta is expected to generate 9.65 times less return on investment than Acreage Holdings. But when comparing it to its historical volatility, Okta Inc is 4.86 times less risky than Acreage Holdings. It trades about 0.02 of its potential returns per unit of risk. Acreage Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Acreage Holdings on August 31, 2024 and sell it today you would lose (22.00) from holding Acreage Holdings or give up 62.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Acreage Holdings
Performance |
| Timeline |
| Okta Inc |
| Acreage Holdings |
Okta and Acreage Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Acreage Holdings
The main advantage of trading using opposite Okta and Acreage Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Acreage 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 Acreage Holdings will offset losses from the drop in Acreage Holdings' long position.The idea behind Okta Inc and Acreage 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.| Acreage Holdings vs. AYR Strategies Class | Acreage Holdings vs. RIV Capital | Acreage Holdings vs. Verano Holdings Corp | Acreage Holdings vs. BZAM |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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