Correlation Between Okta and DTE Energy
Can any of the company-specific risk be diversified away by investing in both Okta and DTE Energy 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 DTE Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and DTE Energy, you can compare the effects of market volatilities on Okta and DTE Energy 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 DTE Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and DTE Energy.
Diversification Opportunities for Okta and DTE Energy
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and DTE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and DTE Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTE Energy 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 DTE Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTE Energy has no effect on the direction of Okta i.e., Okta and DTE Energy go up and down completely randomly.
Pair Corralation between Okta and DTE Energy
Given the investment horizon of 90 days Okta Inc is expected to under-perform the DTE Energy. In addition to that, Okta is 2.43 times more volatile than DTE Energy. It trades about -0.08 of its total potential returns per unit of risk. DTE Energy is currently generating about 0.06 per unit of volatility. If you would invest 11,815 in DTE Energy on August 27, 2024 and sell it today you would earn a total of 645.00 from holding DTE Energy or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. DTE Energy
Performance |
| Timeline |
| Okta Inc |
| DTE Energy |
Okta and DTE Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and DTE Energy
The main advantage of trading using opposite Okta and DTE Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, DTE Energy 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 DTE Energy will offset losses from the drop in DTE Energy's long position.The idea behind Okta Inc and DTE Energy 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.| DTE Energy vs. Alliant Energy Corp | DTE Energy vs. Ameren Corp | DTE Energy vs. CenterPoint Energy | DTE Energy vs. Pinnacle West Capital |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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