Correlation Between Okta and Cannagrow Holdings
Can any of the company-specific risk be diversified away by investing in both Okta and Cannagrow Holdings 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 Cannagrow Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Cannagrow Holdings, you can compare the effects of market volatilities on Okta and Cannagrow Holdings 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 Cannagrow Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Cannagrow Holdings.
Diversification Opportunities for Okta and Cannagrow Holdings
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Cannagrow is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Cannagrow Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannagrow Holdings 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 Cannagrow Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannagrow Holdings has no effect on the direction of Okta i.e., Okta and Cannagrow Holdings go up and down completely randomly.
Pair Corralation between Okta and Cannagrow Holdings
Given the investment horizon of 90 days Okta is expected to generate 89.01 times less return on investment than Cannagrow Holdings. But when comparing it to its historical volatility, Okta Inc is 9.46 times less risky than Cannagrow Holdings. It trades about 0.01 of its potential returns per unit of risk. Cannagrow Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Cannagrow Holdings on August 29, 2024 and sell it today you would earn a total of 0.80 from holding Cannagrow Holdings or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.81% |
| Values | Daily Returns |
Okta Inc vs. Cannagrow Holdings
Performance |
| Timeline |
| Okta Inc |
| Cannagrow Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Okta and Cannagrow Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Cannagrow Holdings
The main advantage of trading using opposite Okta and Cannagrow Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Cannagrow Holdings 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 Cannagrow Holdings will offset losses from the drop in Cannagrow Holdings' long position.The idea behind Okta Inc and Cannagrow Holdings 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.| Cannagrow Holdings vs. Dexterra Group | Cannagrow Holdings vs. Intertek Group Plc | Cannagrow Holdings vs. Wildpack Beverage | Cannagrow Holdings vs. DATA Communications Management |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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