Correlation Between Okta and Brunswick Exploration
Can any of the company-specific risk be diversified away by investing in both Okta and Brunswick Exploration 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 Brunswick Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Brunswick Exploration, you can compare the effects of market volatilities on Okta and Brunswick Exploration 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 Brunswick Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Brunswick Exploration.
Diversification Opportunities for Okta and Brunswick Exploration
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Brunswick is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Brunswick Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Exploration 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 Brunswick Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Exploration has no effect on the direction of Okta i.e., Okta and Brunswick Exploration go up and down completely randomly.
Pair Corralation between Okta and Brunswick Exploration
Given the investment horizon of 90 days Okta Inc is expected to generate 0.35 times more return on investment than Brunswick Exploration. However, Okta Inc is 2.87 times less risky than Brunswick Exploration. It trades about 0.13 of its potential returns per unit of risk. Brunswick Exploration is currently generating about -0.29 per unit of risk. If you would invest 7,325 in Okta Inc on August 29, 2024 and sell it today you would earn a total of 358.00 from holding Okta Inc or generate 4.89% 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. Brunswick Exploration
Performance |
| Timeline |
| Okta Inc |
| Brunswick Exploration |
Okta and Brunswick Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Brunswick Exploration
The main advantage of trading using opposite Okta and Brunswick Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Brunswick Exploration 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 Brunswick Exploration will offset losses from the drop in Brunswick Exploration's long position.The idea behind Okta Inc and Brunswick Exploration 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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