Correlation Between Okta and Deutsche Equity
Can any of the company-specific risk be diversified away by investing in both Okta and Deutsche Equity 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 Deutsche Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Deutsche Equity 500, you can compare the effects of market volatilities on Okta and Deutsche Equity 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 Deutsche Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Deutsche Equity.
Diversification Opportunities for Okta and Deutsche Equity
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Deutsche is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Deutsche Equity 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Equity 500 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 Deutsche Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Equity 500 has no effect on the direction of Okta i.e., Okta and Deutsche Equity go up and down completely randomly.
Pair Corralation between Okta and Deutsche Equity
Given the investment horizon of 90 days Okta is expected to generate 1.04 times less return on investment than Deutsche Equity. In addition to that, Okta is 3.5 times more volatile than Deutsche Equity 500. It trades about 0.03 of its total potential returns per unit of risk. Deutsche Equity 500 is currently generating about 0.11 per unit of volatility. If you would invest 12,316 in Deutsche Equity 500 on August 26, 2024 and sell it today you would earn a total of 6,426 from holding Deutsche Equity 500 or generate 52.18% 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. Deutsche Equity 500
Performance |
| Timeline |
| Okta Inc |
| Deutsche Equity 500 |
Okta and Deutsche Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Deutsche Equity
The main advantage of trading using opposite Okta and Deutsche Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Deutsche Equity 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 Deutsche Equity will offset losses from the drop in Deutsche Equity's long position.The idea behind Okta Inc and Deutsche Equity 500 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.| Deutsche Equity vs. Simt Sp 500 | Deutsche Equity vs. Mainstay Sp 500 | Deutsche Equity vs. Siit Dynamic Asset | Deutsche Equity vs. Columbia Large Cap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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