Correlation Between Okta and Dollar General
Can any of the company-specific risk be diversified away by investing in both Okta and Dollar General 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 Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Dollar General, you can compare the effects of market volatilities on Okta and Dollar General 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 Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Dollar General.
Diversification Opportunities for Okta and Dollar General
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Okta and Dollar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Okta i.e., Okta and Dollar General go up and down completely randomly.
Pair Corralation between Okta and Dollar General
Given the investment horizon of 90 days Okta Inc is expected to generate 0.99 times more return on investment than Dollar General. However, Okta Inc is 1.01 times less risky than Dollar General. It trades about 0.04 of its potential returns per unit of risk. Dollar General is currently generating about -0.12 per unit of risk. If you would invest 7,434 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 208.00 from holding Okta Inc or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Dollar General
Performance |
| Timeline |
| Okta Inc |
| Dollar General |
Okta and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Dollar General
The main advantage of trading using opposite Okta and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General's long position.The idea behind Okta Inc and Dollar General 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.| Dollar General vs. BJs Wholesale Club | Dollar General vs. Costco Wholesale Corp | Dollar General vs. Walmart | Dollar General vs. Dollar Tree |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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