Correlation Between Okta and FNB Corp
Can any of the company-specific risk be diversified away by investing in both Okta and FNB Corp 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 FNB Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and FNB Corp, you can compare the effects of market volatilities on Okta and FNB Corp 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 FNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and FNB Corp.
Diversification Opportunities for Okta and FNB Corp
Average diversification
The 3 months correlation between Okta and FNB is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and FNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Corp 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 FNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Corp has no effect on the direction of Okta i.e., Okta and FNB Corp go up and down completely randomly.
Pair Corralation between Okta and FNB Corp
Given the investment horizon of 90 days Okta is expected to generate 2.33 times less return on investment than FNB Corp. But when comparing it to its historical volatility, Okta Inc is 2.08 times less risky than FNB Corp. It trades about 0.19 of its potential returns per unit of risk. FNB Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,469 in FNB Corp on August 31, 2024 and sell it today you would earn a total of 246.00 from holding FNB Corp or generate 16.75% 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. FNB Corp
Performance |
| Timeline |
| Okta Inc |
| FNB Corp |
Okta and FNB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and FNB Corp
The main advantage of trading using opposite Okta and FNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, FNB Corp 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 FNB Corp will offset losses from the drop in FNB Corp's long position.The idea behind Okta Inc and FNB Corp 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.| FNB Corp vs. ST Bancorp | FNB Corp vs. CrossFirst Bankshares | FNB Corp vs. Enterprise Financial Services | FNB Corp vs. The First Bancshares, |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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