Correlation Between Okta and Green Thumb
Can any of the company-specific risk be diversified away by investing in both Okta and Green Thumb 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 Green Thumb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Green Thumb Industries, you can compare the effects of market volatilities on Okta and Green Thumb 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 Green Thumb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Green Thumb.
Diversification Opportunities for Okta and Green Thumb
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Green is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Green Thumb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Thumb Industries 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 Green Thumb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Thumb Industries has no effect on the direction of Okta i.e., Okta and Green Thumb go up and down completely randomly.
Pair Corralation between Okta and Green Thumb
Given the investment horizon of 90 days Okta Inc is expected to generate 0.71 times more return on investment than Green Thumb. However, Okta Inc is 1.4 times less risky than Green Thumb. It trades about 0.03 of its potential returns per unit of risk. Green Thumb Industries is currently generating about 0.0 per unit of risk. If you would invest 6,166 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 1,484 from holding Okta Inc or generate 24.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Green Thumb Industries
Performance |
| Timeline |
| Okta Inc |
| Green Thumb Industries |
Okta and Green Thumb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Green Thumb
The main advantage of trading using opposite Okta and Green Thumb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Green Thumb 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 Green Thumb will offset losses from the drop in Green Thumb's long position.The idea behind Okta Inc and Green Thumb Industries 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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