Correlation Between Okta and Grillit
Can any of the company-specific risk be diversified away by investing in both Okta and Grillit 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 Grillit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Grillit, you can compare the effects of market volatilities on Okta and Grillit 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 Grillit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Grillit.
Diversification Opportunities for Okta and Grillit
Good diversification
The 3 months correlation between Okta and Grillit is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Grillit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grillit 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 Grillit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grillit has no effect on the direction of Okta i.e., Okta and Grillit go up and down completely randomly.
Pair Corralation between Okta and Grillit
Given the investment horizon of 90 days Okta is expected to generate 171.53 times less return on investment than Grillit. But when comparing it to its historical volatility, Okta Inc is 29.85 times less risky than Grillit. It trades about 0.02 of its potential returns per unit of risk. Grillit is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Grillit on August 31, 2024 and sell it today you would earn a total of 0.03 from holding Grillit or generate 150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Okta Inc vs. Grillit
Performance |
| Timeline |
| Okta Inc |
| Grillit |
Okta and Grillit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Grillit
The main advantage of trading using opposite Okta and Grillit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Grillit 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 Grillit will offset losses from the drop in Grillit's long position.The idea behind Okta Inc and Grillit 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.| Grillit vs. McDonalds | Grillit vs. Starbucks | Grillit vs. Chipotle Mexican Grill | Grillit vs. Compass Group PLC |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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