Correlation Between Okta and Assertio Therapeutics
Can any of the company-specific risk be diversified away by investing in both Okta and Assertio Therapeutics 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 Assertio Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Assertio Therapeutics, you can compare the effects of market volatilities on Okta and Assertio Therapeutics 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 Assertio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Assertio Therapeutics.
Diversification Opportunities for Okta and Assertio Therapeutics
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and Assertio is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Assertio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assertio Therapeutics 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 Assertio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assertio Therapeutics has no effect on the direction of Okta i.e., Okta and Assertio Therapeutics go up and down completely randomly.
Pair Corralation between Okta and Assertio Therapeutics
Given the investment horizon of 90 days Okta Inc is expected to generate 0.28 times more return on investment than Assertio Therapeutics. However, Okta Inc is 3.59 times less risky than Assertio Therapeutics. It trades about 0.13 of its potential returns per unit of risk. Assertio Therapeutics is currently generating about -0.03 per unit of risk. If you would invest 7,325 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Assertio Therapeutics
Performance |
| Timeline |
| Okta Inc |
| Assertio Therapeutics |
Okta and Assertio Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Assertio Therapeutics
The main advantage of trading using opposite Okta and Assertio Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Assertio Therapeutics 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 Assertio Therapeutics will offset losses from the drop in Assertio Therapeutics' long position.The idea behind Okta Inc and Assertio Therapeutics 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.| Assertio Therapeutics vs. Amneal Pharmaceuticals, Class | Assertio Therapeutics vs. Lifecore Biomedical | Assertio Therapeutics vs. Ironwood Pharmaceuticals | Assertio Therapeutics vs. Neurocrine Biosciences |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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