Correlation Between Okta and Brent Crude
Can any of the company-specific risk be diversified away by investing in both Okta and Brent Crude 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 Brent Crude into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Brent Crude Oil, you can compare the effects of market volatilities on Okta and Brent Crude 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 Brent Crude. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Brent Crude.
Diversification Opportunities for Okta and Brent Crude
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and Brent is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Brent Crude Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brent Crude Oil 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 Brent Crude. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brent Crude Oil has no effect on the direction of Okta i.e., Okta and Brent Crude go up and down completely randomly.
Pair Corralation between Okta and Brent Crude
Given the investment horizon of 90 days Okta Inc is expected to generate 0.87 times more return on investment than Brent Crude. However, Okta Inc is 1.15 times less risky than Brent Crude. It trades about 0.16 of its potential returns per unit of risk. Brent Crude Oil is currently generating about 0.03 per unit of risk. If you would invest 7,215 in Okta Inc on August 25, 2024 and sell it today you would earn a total of 442.00 from holding Okta Inc or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Brent Crude Oil
Performance |
| Timeline |
| Okta Inc |
| Brent Crude Oil |
Okta and Brent Crude Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Brent Crude
The main advantage of trading using opposite Okta and Brent Crude positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Brent Crude 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 Brent Crude will offset losses from the drop in Brent Crude's long position.The idea behind Okta Inc and Brent Crude Oil 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.| Brent Crude vs. Micro Silver Futures | Brent Crude vs. 30 Day Fed | Brent Crude vs. Mini Dow Jones | Brent Crude vs. Gasoline RBOB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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