Correlation Between Okta and II-VI Incorporated

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Can any of the company-specific risk be diversified away by investing in both Okta and II-VI Incorporated 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 II-VI Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and II VI Incorporated, you can compare the effects of market volatilities on Okta and II-VI Incorporated 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 II-VI Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and II-VI Incorporated.

Diversification Opportunities for Okta and II-VI Incorporated

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Okta and II-VI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and II VI Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on II-VI Incorporated 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 II-VI Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of II-VI Incorporated has no effect on the direction of Okta i.e., Okta and II-VI Incorporated go up and down completely randomly.

Pair Corralation between Okta and II-VI Incorporated

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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Okta Inc  vs.  II VI Incorporated

 Performance 
       Timeline  
Okta Inc 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Okta is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
II-VI Incorporated 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days II VI Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, II-VI Incorporated is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Okta and II-VI Incorporated Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Okta and II-VI Incorporated

The main advantage of trading using opposite Okta and II-VI Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, II-VI Incorporated 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 II-VI Incorporated will offset losses from the drop in II-VI Incorporated's long position.
The idea behind Okta Inc and II VI Incorporated 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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