Correlation Between Okta and First Investors
Can any of the company-specific risk be diversified away by investing in both Okta and First Investors 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 First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and First Investors Select, you can compare the effects of market volatilities on Okta and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and First Investors.
Diversification Opportunities for Okta and First Investors
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and First is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Okta i.e., Okta and First Investors go up and down completely randomly.
Pair Corralation between Okta and First Investors
Given the investment horizon of 90 days Okta is expected to generate 1.17 times less return on investment than First Investors. In addition to that, Okta is 3.28 times more volatile than First Investors Select. It trades about 0.03 of its total potential returns per unit of risk. First Investors Select is currently generating about 0.1 per unit of volatility. If you would invest 833.00 in First Investors Select on August 29, 2024 and sell it today you would earn a total of 453.00 from holding First Investors Select or generate 54.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. First Investors Select
Performance |
| Timeline |
| Okta Inc |
| First Investors Select |
Okta and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and First Investors
The main advantage of trading using opposite Okta and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.The idea behind Okta Inc and First Investors Select 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.| First Investors vs. Vanguard Emerging Markets | First Investors vs. Dodge Cox Emerging | First Investors vs. Barings Emerging Markets | First Investors vs. Rbc Emerging Markets |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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