Correlation Between Okta and Highland Small-cap
Can any of the company-specific risk be diversified away by investing in both Okta and Highland Small-cap 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 Highland Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Highland Small Cap Equity, you can compare the effects of market volatilities on Okta and Highland Small-cap 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 Highland Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Highland Small-cap.
Diversification Opportunities for Okta and Highland Small-cap
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Highland is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Highland Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Small Cap 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 Highland Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Small Cap has no effect on the direction of Okta i.e., Okta and Highland Small-cap go up and down completely randomly.
Pair Corralation between Okta and Highland Small-cap
Given the investment horizon of 90 days Okta Inc is expected to generate 2.41 times more return on investment than Highland Small-cap. However, Okta is 2.41 times more volatile than Highland Small Cap Equity. It trades about 0.22 of its potential returns per unit of risk. Highland Small Cap Equity is currently generating about 0.33 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 | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Highland Small Cap Equity
Performance |
| Timeline |
| Okta Inc |
| Highland Small Cap |
Okta and Highland Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Highland Small-cap
The main advantage of trading using opposite Okta and Highland Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Highland Small-cap 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 Highland Small-cap will offset losses from the drop in Highland Small-cap's long position.The idea behind Okta Inc and Highland Small Cap Equity 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.| Highland Small-cap vs. The Hartford Inflation | Highland Small-cap vs. Aqr Managed Futures | Highland Small-cap vs. Fidelity Advisor 529 | Highland Small-cap vs. Ab Bond Inflation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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