Correlation Between Okta and Eternit SA
Can any of the company-specific risk be diversified away by investing in both Okta and Eternit SA 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 Eternit SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Eternit SA, you can compare the effects of market volatilities on Okta and Eternit SA 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 Eternit SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Eternit SA.
Diversification Opportunities for Okta and Eternit SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Eternit is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit SA 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of Okta i.e., Okta and Eternit SA go up and down completely randomly.
Pair Corralation between Okta and Eternit SA
Given the investment horizon of 90 days Okta is expected to generate 2.43 times less return on investment than Eternit SA. But when comparing it to its historical volatility, Okta Inc is 2.12 times less risky than Eternit SA. It trades about 0.15 of its potential returns per unit of risk. Eternit SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 514.00 in Eternit SA on August 31, 2024 and sell it today you would earn a total of 62.00 from holding Eternit SA or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Okta Inc vs. Eternit SA
Performance |
| Timeline |
| Okta Inc |
| Eternit SA |
Okta and Eternit SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Eternit SA
The main advantage of trading using opposite Okta and Eternit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Eternit SA 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 Eternit SA will offset losses from the drop in Eternit SA's long position.The idea behind Okta Inc and Eternit SA 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.| Eternit SA vs. BrasilAgro Companhia | Eternit SA vs. Indstrias Romi SA | Eternit SA vs. JHSF Participaes SA | Eternit SA vs. Energisa SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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