Correlation Between Okta and Group 6
Can any of the company-specific risk be diversified away by investing in both Okta and Group 6 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 Group 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Group 6 Metals, you can compare the effects of market volatilities on Okta and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Group 6.
Diversification Opportunities for Okta and Group 6
Poor diversification
The 3 months correlation between Okta and Group is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 Metals 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Okta i.e., Okta and Group 6 go up and down completely randomly.
Pair Corralation between Okta and Group 6
If you would invest 7,399 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 284.00 from holding Okta Inc or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Group 6 Metals
Performance |
| Timeline |
| Okta Inc |
| Group 6 Metals |
Okta and Group 6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Group 6
The main advantage of trading using opposite Okta and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.The idea behind Okta Inc and Group 6 Metals 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.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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