Correlation Between Okta and Healthcare
Can any of the company-specific risk be diversified away by investing in both Okta and Healthcare 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 Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Healthcare AI Acquisition, you can compare the effects of market volatilities on Okta and Healthcare 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 Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Healthcare.
Diversification Opportunities for Okta and Healthcare
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Healthcare is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Healthcare AI Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare AI Acquisition 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare AI Acquisition has no effect on the direction of Okta i.e., Okta and Healthcare go up and down completely randomly.
Pair Corralation between Okta and Healthcare
Given the investment horizon of 90 days Okta Inc is expected to generate 5.05 times more return on investment than Healthcare. However, Okta is 5.05 times more volatile than Healthcare AI Acquisition. It trades about 0.01 of its potential returns per unit of risk. Healthcare AI Acquisition is currently generating about 0.06 per unit of risk. If you would invest 7,604 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 38.00 from holding Okta Inc or generate 0.5% 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. Healthcare AI Acquisition
Performance |
| Timeline |
| Okta Inc |
| Healthcare AI Acquisition |
Okta and Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Healthcare
The main advantage of trading using opposite Okta and Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Healthcare 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 Healthcare will offset losses from the drop in Healthcare's long position.The idea behind Okta Inc and Healthcare AI Acquisition 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |