Correlation Between Okta and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Okta and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and SPDR SP Bank, you can compare the effects of market volatilities on Okta and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and SPDR SP.
Diversification Opportunities for Okta and SPDR SP
Significant diversification
The 3 months correlation between Okta and SPDR is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SPDR SP Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Bank 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Bank has no effect on the direction of Okta i.e., Okta and SPDR SP go up and down completely randomly.
Pair Corralation between Okta and SPDR SP
Given the investment horizon of 90 days Okta is expected to generate 2.48 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Okta Inc is 1.66 times less risky than SPDR SP. It trades about 0.13 of its potential returns per unit of risk. SPDR SP Bank is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,525 in SPDR SP Bank on August 28, 2024 and sell it today you would earn a total of 691.00 from holding SPDR SP Bank or generate 12.51% 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. SPDR SP Bank
Performance |
| Timeline |
| Okta Inc |
| SPDR SP Bank |
Okta and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and SPDR SP
The main advantage of trading using opposite Okta and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.The idea behind Okta Inc and SPDR SP Bank 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.| SPDR SP vs. SPDR SP Regional | SPDR SP vs. SPDR SP Insurance | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |