Correlation Between Okta and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Okta and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Fast Retailing Co, you can compare the effects of market volatilities on Okta and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Fast Retailing.
Diversification Opportunities for Okta and Fast Retailing
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Fast is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Okta i.e., Okta and Fast Retailing go up and down completely randomly.
Pair Corralation between Okta and Fast Retailing
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Fast Retailing. In addition to that, Okta is 1.32 times more volatile than Fast Retailing Co. It trades about -0.06 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.1 per unit of volatility. If you would invest 23,680 in Fast Retailing Co on August 25, 2024 and sell it today you would earn a total of 6,300 from holding Fast Retailing Co or generate 26.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.95% |
| Values | Daily Returns |
Okta Inc vs. Fast Retailing Co
Performance |
| Timeline |
| Okta Inc |
| Fast Retailing |
Okta and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Fast Retailing
The main advantage of trading using opposite Okta and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.The idea behind Okta Inc and Fast Retailing Co 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.| Fast Retailing vs. Autohome ADR | Fast Retailing vs. KB HOME | Fast Retailing vs. Sqs Software Quality | Fast Retailing vs. Alfa Financial Software |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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