Correlation Between Okta and Bank First
Can any of the company-specific risk be diversified away by investing in both Okta and Bank First 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 Bank First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Bank First National, you can compare the effects of market volatilities on Okta and Bank First 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 Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Bank First.
Diversification Opportunities for Okta and Bank First
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Bank is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National 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 Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Okta i.e., Okta and Bank First go up and down completely randomly.
Pair Corralation between Okta and Bank First
Given the investment horizon of 90 days Okta is expected to generate 6.21 times less return on investment than Bank First. In addition to that, Okta is 1.37 times more volatile than Bank First National. It trades about 0.01 of its total potential returns per unit of risk. Bank First National is currently generating about 0.07 per unit of volatility. If you would invest 7,527 in Bank First National on August 25, 2024 and sell it today you would earn a total of 2,934 from holding Bank First National or generate 38.99% 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. Bank First National
Performance |
| Timeline |
| Okta Inc |
| Bank First National |
Okta and Bank First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Bank First
The main advantage of trading using opposite Okta and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.The idea behind Okta Inc and Bank First National 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.| Bank First vs. Norwood Financial Corp | Bank First vs. Chemung Financial Corp | Bank First vs. Home Federal Bancorp | Bank First vs. Rhinebeck Bancorp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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