Correlation Between Okta and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Okta and Franco Nevada 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 Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Franco Nevada, you can compare the effects of market volatilities on Okta and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Franco Nevada.
Diversification Opportunities for Okta and Franco Nevada
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Franco is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Okta i.e., Okta and Franco Nevada go up and down completely randomly.
Pair Corralation between Okta and Franco Nevada
Given the investment horizon of 90 days Okta is expected to generate 3.4 times less return on investment than Franco Nevada. But when comparing it to its historical volatility, Okta Inc is 1.05 times less risky than Franco Nevada. It trades about 0.01 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,870 in Franco Nevada on August 31, 2024 and sell it today you would earn a total of 426.00 from holding Franco Nevada or generate 3.59% 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. Franco Nevada
Performance |
| Timeline |
| Okta Inc |
| Franco Nevada |
Okta and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Franco Nevada
The main advantage of trading using opposite Okta and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.The idea behind Okta Inc and Franco Nevada 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.| Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold Ltd |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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