Correlation Between Okta and IShares 3
Can any of the company-specific risk be diversified away by investing in both Okta and IShares 3 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 IShares 3 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and iShares 3 7 Year, you can compare the effects of market volatilities on Okta and IShares 3 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 IShares 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and IShares 3.
Diversification Opportunities for Okta and IShares 3
Poor diversification
The 3 months correlation between Okta and IShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and iShares 3 7 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 3 7 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 IShares 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 3 7 has no effect on the direction of Okta i.e., Okta and IShares 3 go up and down completely randomly.
Pair Corralation between Okta and IShares 3
Given the investment horizon of 90 days Okta Inc is expected to generate 10.38 times more return on investment than IShares 3. However, Okta is 10.38 times more volatile than iShares 3 7 Year. It trades about 0.04 of its potential returns per unit of risk. iShares 3 7 Year is currently generating about 0.04 per unit of risk. If you would invest 7,315 in Okta Inc on January 13, 2025 and sell it today you would earn a total of 2,867 from holding Okta Inc or generate 39.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. iShares 3 7 Year
Performance |
| Timeline |
| Okta Inc |
| iShares 3 7 |
Okta and IShares 3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and IShares 3
The main advantage of trading using opposite Okta and IShares 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, IShares 3 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 IShares 3 will offset losses from the drop in IShares 3's long position.The idea behind Okta Inc and iShares 3 7 Year 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.| IShares 3 vs. iShares 10 20 Year | IShares 3 vs. iShares 7 10 Year | IShares 3 vs. iShares 1 3 Year | IShares 3 vs. iShares MBS ETF |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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