Correlation Between Okta and Jensen Quality
Can any of the company-specific risk be diversified away by investing in both Okta and Jensen Quality 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 Jensen Quality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Jensen Quality Value, you can compare the effects of market volatilities on Okta and Jensen Quality 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 Jensen Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Jensen Quality.
Diversification Opportunities for Okta and Jensen Quality
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Jensen is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Jensen Quality Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Quality Value 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 Jensen Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Quality Value has no effect on the direction of Okta i.e., Okta and Jensen Quality go up and down completely randomly.
Pair Corralation between Okta and Jensen Quality
Given the investment horizon of 90 days Okta Inc is expected to generate 3.2 times more return on investment than Jensen Quality. However, Okta is 3.2 times more volatile than Jensen Quality Value. It trades about 0.03 of its potential returns per unit of risk. Jensen Quality Value is currently generating about 0.05 per unit of risk. If you would invest 6,194 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 1,463 from holding Okta Inc or generate 23.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Okta Inc vs. Jensen Quality Value
Performance |
Timeline |
Okta Inc |
Jensen Quality Value |
Okta and Jensen Quality Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Okta and Jensen Quality
The main advantage of trading using opposite Okta and Jensen Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Jensen Quality 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 Jensen Quality will offset losses from the drop in Jensen Quality's long position.The idea behind Okta Inc and Jensen Quality Value 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.Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio | Jensen Quality vs. The Jensen Portfolio |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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