Correlation Between Okta and Fidelity Preferred
Can any of the company-specific risk be diversified away by investing in both Okta and Fidelity Preferred 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 Fidelity Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Fidelity Preferred Securities, you can compare the effects of market volatilities on Okta and Fidelity Preferred 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 Fidelity Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Fidelity Preferred.
Diversification Opportunities for Okta and Fidelity Preferred
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Okta and Fidelity is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Fidelity Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Preferred 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 Fidelity Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Preferred has no effect on the direction of Okta i.e., Okta and Fidelity Preferred go up and down completely randomly.
Pair Corralation between Okta and Fidelity Preferred
Given the investment horizon of 90 days Okta Inc is expected to generate 8.54 times more return on investment than Fidelity Preferred. However, Okta is 8.54 times more volatile than Fidelity Preferred Securities. It trades about 0.02 of its potential returns per unit of risk. Fidelity Preferred Securities is currently generating about 0.12 per unit of risk. If you would invest 7,018 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 639.00 from holding Okta Inc or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Fidelity Preferred Securities
Performance |
| Timeline |
| Okta Inc |
| Fidelity Preferred |
Okta and Fidelity Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Fidelity Preferred
The main advantage of trading using opposite Okta and Fidelity Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Fidelity Preferred 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 Fidelity Preferred will offset losses from the drop in Fidelity Preferred's long position.The idea behind Okta Inc and Fidelity Preferred Securities 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.| Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity High Yield | Fidelity Preferred vs. Fidelity Corporate Bond |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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