Correlation Between Okta and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Okta and Innovator ETFs 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 Innovator ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Innovator ETFs Trust, you can compare the effects of market volatilities on Okta and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Innovator ETFs.
Diversification Opportunities for Okta and Innovator ETFs
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Innovator is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs Trust 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Okta i.e., Okta and Innovator ETFs go up and down completely randomly.
Pair Corralation between Okta and Innovator ETFs
Given the investment horizon of 90 days Okta Inc is expected to generate 4.84 times more return on investment than Innovator ETFs. However, Okta is 4.84 times more volatile than Innovator ETFs Trust. It trades about 0.16 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about -0.08 per unit of risk. If you would invest 7,215 in Okta Inc on August 25, 2024 and sell it today you would earn a total of 442.00 from holding Okta Inc or generate 6.13% 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. Innovator ETFs Trust
Performance |
| Timeline |
| Okta Inc |
| Innovator ETFs Trust |
Okta and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Innovator ETFs
The main advantage of trading using opposite Okta and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.The idea behind Okta Inc and Innovator ETFs Trust 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.| Innovator ETFs vs. First Trust Cboe | Innovator ETFs vs. FT Cboe Vest | Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. FT Cboe Vest |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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