Correlation Between Okta and Lobe Sciences
Can any of the company-specific risk be diversified away by investing in both Okta and Lobe Sciences 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 Lobe Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Lobe Sciences, you can compare the effects of market volatilities on Okta and Lobe Sciences 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 Lobe Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Lobe Sciences.
Diversification Opportunities for Okta and Lobe Sciences
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Lobe is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Lobe Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lobe Sciences 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 Lobe Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lobe Sciences has no effect on the direction of Okta i.e., Okta and Lobe Sciences go up and down completely randomly.
Pair Corralation between Okta and Lobe Sciences
Given the investment horizon of 90 days Okta is expected to generate 832.43 times less return on investment than Lobe Sciences. But when comparing it to its historical volatility, Okta Inc is 73.18 times less risky than Lobe Sciences. It trades about 0.02 of its potential returns per unit of risk. Lobe Sciences is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2.63 in Lobe Sciences on August 26, 2024 and sell it today you would lose (1.38) from holding Lobe Sciences or give up 52.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Lobe Sciences
Performance |
| Timeline |
| Okta Inc |
| Lobe Sciences |
Okta and Lobe Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Lobe Sciences
The main advantage of trading using opposite Okta and Lobe Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Lobe Sciences 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 Lobe Sciences will offset losses from the drop in Lobe Sciences' long position.The idea behind Okta Inc and Lobe Sciences 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.| Lobe Sciences vs. Green Cures Botanical | Lobe Sciences vs. Galexxy Holdings | Lobe Sciences vs. Indoor Harvest Corp | Lobe Sciences vs. Speakeasy Cannabis Club |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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