Correlation Between Okta and Capri Holdings
Can any of the company-specific risk be diversified away by investing in both Okta and Capri 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 Capri 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 Capri Holdings, you can compare the effects of market volatilities on Okta and Capri 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 Capri Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Capri Holdings.
Diversification Opportunities for Okta and Capri Holdings
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Capri is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Capri Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capri 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 Capri Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capri Holdings has no effect on the direction of Okta i.e., Okta and Capri Holdings go up and down completely randomly.
Pair Corralation between Okta and Capri Holdings
Given the investment horizon of 90 days Okta Inc is expected to generate 0.73 times more return on investment than Capri Holdings. However, Okta Inc is 1.37 times less risky than Capri Holdings. It trades about 0.03 of its potential returns per unit of risk. Capri Holdings is currently generating about -0.03 per unit of risk. If you would invest 6,189 in Okta Inc on August 27, 2024 and sell it today you would earn a total of 1,468 from holding Okta Inc or generate 23.72% 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. Capri Holdings
Performance |
| Timeline |
| Okta Inc |
| Capri Holdings |
Okta and Capri Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Capri Holdings
The main advantage of trading using opposite Okta and Capri Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Capri 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 Capri Holdings will offset losses from the drop in Capri Holdings' long position.The idea behind Okta Inc and Capri 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.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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