Correlation Between Okta and FIRST MUTUAL
Can any of the company-specific risk be diversified away by investing in both Okta and FIRST MUTUAL 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 MUTUAL 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 MUTUAL HOLDINGS, you can compare the effects of market volatilities on Okta and FIRST MUTUAL 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 MUTUAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and FIRST MUTUAL.
Diversification Opportunities for Okta and FIRST MUTUAL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and FIRST is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and FIRST MUTUAL HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL HOLDINGS 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 MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL HOLDINGS has no effect on the direction of Okta i.e., Okta and FIRST MUTUAL go up and down completely randomly.
Pair Corralation between Okta and FIRST MUTUAL
Given the investment horizon of 90 days Okta is expected to generate 1.08 times less return on investment than FIRST MUTUAL. In addition to that, Okta is 2.58 times more volatile than FIRST MUTUAL HOLDINGS. It trades about 0.11 of its total potential returns per unit of risk. FIRST MUTUAL HOLDINGS is currently generating about 0.31 per unit of volatility. If you would invest 43,050 in FIRST MUTUAL HOLDINGS on August 30, 2024 and sell it today you would earn a total of 1,945 from holding FIRST MUTUAL HOLDINGS or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Okta Inc vs. FIRST MUTUAL HOLDINGS
Performance |
| Timeline |
| Okta Inc |
| FIRST MUTUAL HOLDINGS |
Okta and FIRST MUTUAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and FIRST MUTUAL
The main advantage of trading using opposite Okta and FIRST MUTUAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, FIRST MUTUAL 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 MUTUAL will offset losses from the drop in FIRST MUTUAL's long position.The idea behind Okta Inc and FIRST MUTUAL HOLDINGS 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 MUTUAL vs. FIRST MUTUAL PROPERTIES | FIRST MUTUAL vs. STAR AFRICA PORATION | FIRST MUTUAL vs. CAFCA LIMITED | FIRST MUTUAL vs. AFRICAN DISTILLERS LIMITED |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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