Correlation Between Okta and Invesco KBW
Can any of the company-specific risk be diversified away by investing in both Okta and Invesco KBW 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 Invesco KBW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Invesco KBW Regional, you can compare the effects of market volatilities on Okta and Invesco KBW 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 Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Invesco KBW.
Diversification Opportunities for Okta and Invesco KBW
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and Invesco is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Invesco KBW Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Regional 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 Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Regional has no effect on the direction of Okta i.e., Okta and Invesco KBW go up and down completely randomly.
Pair Corralation between Okta and Invesco KBW
Given the investment horizon of 90 days Okta is expected to generate 2.16 times less return on investment than Invesco KBW. In addition to that, Okta is 1.45 times more volatile than Invesco KBW Regional. It trades about 0.02 of its total potential returns per unit of risk. Invesco KBW Regional is currently generating about 0.07 per unit of volatility. If you would invest 4,448 in Invesco KBW Regional on August 31, 2024 and sell it today you would earn a total of 2,259 from holding Invesco KBW Regional or generate 50.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Okta Inc vs. Invesco KBW Regional
Performance |
| Timeline |
| Okta Inc |
| Invesco KBW Regional |
Okta and Invesco KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Invesco KBW
The main advantage of trading using opposite Okta and Invesco KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Invesco KBW 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 Invesco KBW will offset losses from the drop in Invesco KBW's long position.The idea behind Okta Inc and Invesco KBW Regional 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.| Invesco KBW vs. First Trust NASDAQ | Invesco KBW vs. Invesco KBW Bank | Invesco KBW vs. Invesco KBW Property | Invesco KBW vs. Invesco SP SmallCap |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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