Correlation Between Okta and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Okta and ProShares UltraShort 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 ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and ProShares UltraShort Gold, you can compare the effects of market volatilities on Okta and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and ProShares UltraShort.
Diversification Opportunities for Okta and ProShares UltraShort
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Okta and ProShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and ProShares UltraShort Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Gold 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Gold has no effect on the direction of Okta i.e., Okta and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Okta and ProShares UltraShort
Given the investment horizon of 90 days Okta Inc is expected to generate 1.19 times more return on investment than ProShares UltraShort. However, Okta is 1.19 times more volatile than ProShares UltraShort Gold. It trades about -0.03 of its potential returns per unit of risk. ProShares UltraShort Gold is currently generating about -0.08 per unit of risk. If you would invest 8,850 in Okta Inc on August 31, 2024 and sell it today you would lose (1,094) from holding Okta Inc or give up 12.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. ProShares UltraShort Gold
Performance |
| Timeline |
| Okta Inc |
| ProShares UltraShort Gold |
Okta and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and ProShares UltraShort
The main advantage of trading using opposite Okta and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.The idea behind Okta Inc and ProShares UltraShort Gold 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.| ProShares UltraShort vs. ProShares UltraShort Bloomberg | ProShares UltraShort vs. ProShares UltraShort Silver | ProShares UltraShort vs. MicroSectors Gold Miners | ProShares UltraShort vs. UBS ETRACS |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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