Correlation Between Okta and LG DAX
Can any of the company-specific risk be diversified away by investing in both Okta and LG DAX 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 LG DAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and LG DAX Daily, you can compare the effects of market volatilities on Okta and LG DAX 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 LG DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and LG DAX.
Diversification Opportunities for Okta and LG DAX
Modest diversification
The 3 months correlation between Okta and DES2 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily 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 LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of Okta i.e., Okta and LG DAX go up and down completely randomly.
Pair Corralation between Okta and LG DAX
Given the investment horizon of 90 days Okta Inc is expected to generate 1.11 times more return on investment than LG DAX. However, Okta is 1.11 times more volatile than LG DAX Daily. It trades about 0.13 of its potential returns per unit of risk. LG DAX Daily is currently generating about 0.1 per unit of risk. If you would invest 7,325 in Okta Inc on August 27, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. LG DAX Daily
Performance |
| Timeline |
| Okta Inc |
| LG DAX Daily |
Okta and LG DAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and LG DAX
The main advantage of trading using opposite Okta and LG DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, LG DAX 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 LG DAX will offset losses from the drop in LG DAX's long position.The idea behind Okta Inc and LG DAX Daily 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.| LG DAX vs. LG DAX Daily | LG DAX vs. iShares Govt Bond | LG DAX vs. Amundi MSCI Europe | LG DAX vs. iShares Global AAA AA |
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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