Correlation Between Okta and Atkore International
Can any of the company-specific risk be diversified away by investing in both Okta and Atkore International 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 Atkore International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Atkore International Group, you can compare the effects of market volatilities on Okta and Atkore International 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 Atkore International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Atkore International.
Diversification Opportunities for Okta and Atkore International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Okta and Atkore is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Atkore International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atkore International 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 Atkore International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atkore International has no effect on the direction of Okta i.e., Okta and Atkore International go up and down completely randomly.
Pair Corralation between Okta and Atkore International
Given the investment horizon of 90 days Okta is expected to generate 1.89 times less return on investment than Atkore International. But when comparing it to its historical volatility, Okta Inc is 2.45 times less risky than Atkore International. It trades about 0.13 of its potential returns per unit of risk. Atkore International Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8,821 in Atkore International Group on August 28, 2024 and sell it today you would earn a total of 640.00 from holding Atkore International Group or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Atkore International Group
Performance |
| Timeline |
| Okta Inc |
| Atkore International |
Okta and Atkore International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Atkore International
The main advantage of trading using opposite Okta and Atkore International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Atkore International 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 Atkore International will offset losses from the drop in Atkore International's long position.The idea behind Okta Inc and Atkore International Group 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.| Atkore International vs. Hubbell | Atkore International vs. Enersys | Atkore International vs. Advanced Energy Industries | Atkore International vs. nVent Electric PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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