Correlation Between Okta and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Okta and Intermediate Capital 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 Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Intermediate Capital Group, you can compare the effects of market volatilities on Okta and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Intermediate Capital.
Diversification Opportunities for Okta and Intermediate Capital
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Intermediate is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Okta i.e., Okta and Intermediate Capital go up and down completely randomly.
Pair Corralation between Okta and Intermediate Capital
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Intermediate Capital. In addition to that, Okta is 1.46 times more volatile than Intermediate Capital Group. It trades about -0.12 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.0 per unit of volatility. If you would invest 214,600 in Intermediate Capital Group on August 28, 2024 and sell it today you would lose (1,800) from holding Intermediate Capital Group or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Okta Inc vs. Intermediate Capital Group
Performance |
| Timeline |
| Okta Inc |
| Intermediate Capital |
Okta and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Intermediate Capital
The main advantage of trading using opposite Okta and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.The idea behind Okta Inc and Intermediate Capital Group 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.| Intermediate Capital vs. Sovereign Metals | Intermediate Capital vs. Fulcrum Metals PLC | Intermediate Capital vs. Panther Metals PLC | Intermediate Capital vs. AMG Advanced Metallurgical |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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