Correlation Between Okta and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Okta and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Goldman Sachs Small, you can compare the effects of market volatilities on Okta and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Goldman Sachs.
Diversification Opportunities for Okta and Goldman Sachs
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and Goldman is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Goldman Sachs Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Small 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Small has no effect on the direction of Okta i.e., Okta and Goldman Sachs go up and down completely randomly.
Pair Corralation between Okta and Goldman Sachs
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Goldman Sachs. In addition to that, Okta is 1.64 times more volatile than Goldman Sachs Small. It trades about -0.04 of its total potential returns per unit of risk. Goldman Sachs Small is currently generating about 0.1 per unit of volatility. If you would invest 2,067 in Goldman Sachs Small on August 29, 2024 and sell it today you would earn a total of 384.00 from holding Goldman Sachs Small or generate 18.58% 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. Goldman Sachs Small
Performance |
| Timeline |
| Okta Inc |
| Goldman Sachs Small |
Okta and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Goldman Sachs
The main advantage of trading using opposite Okta and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.The idea behind Okta Inc and Goldman Sachs Small 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.| Goldman Sachs vs. Wasatch Small Cap | Goldman Sachs vs. Small Cap Stock | Goldman Sachs vs. Tax Managed Mid Small | Goldman Sachs vs. American Century Diversified |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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