Correlation Between Okta and Stock Index
Can any of the company-specific risk be diversified away by investing in both Okta and Stock Index 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 Stock Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Stock Index Fund, you can compare the effects of market volatilities on Okta and Stock Index 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 Stock Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Stock Index.
Diversification Opportunities for Okta and Stock Index
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and Stock is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Stock Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Index Fund 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 Stock Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Index Fund has no effect on the direction of Okta i.e., Okta and Stock Index go up and down completely randomly.
Pair Corralation between Okta and Stock Index
Given the investment horizon of 90 days Okta Inc is expected to generate 2.35 times more return on investment than Stock Index. However, Okta is 2.35 times more volatile than Stock Index Fund. It trades about 0.22 of its potential returns per unit of risk. Stock Index Fund is currently generating about 0.36 per unit of risk. If you would invest 7,189 in Okta Inc on September 1, 2024 and sell it today you would earn a total of 567.00 from holding Okta Inc or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Okta Inc vs. Stock Index Fund
Performance |
| Timeline |
| Okta Inc |
| Stock Index Fund |
Okta and Stock Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Stock Index
The main advantage of trading using opposite Okta and Stock Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Stock Index 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 Stock Index will offset losses from the drop in Stock Index's long position.The idea behind Okta Inc and Stock Index Fund 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.| Stock Index vs. Value Fund Value | Stock Index vs. Growth Fund Growth | Stock Index vs. International Equity Fund | Stock Index vs. Short Term Bond Fund |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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