Correlation Between Okta and Lyons Bancorp
Can any of the company-specific risk be diversified away by investing in both Okta and Lyons Bancorp 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 Lyons Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Lyons Bancorp, you can compare the effects of market volatilities on Okta and Lyons Bancorp 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 Lyons Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Lyons Bancorp.
Diversification Opportunities for Okta and Lyons Bancorp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Lyons is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Lyons Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyons Bancorp 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 Lyons Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyons Bancorp has no effect on the direction of Okta i.e., Okta and Lyons Bancorp go up and down completely randomly.
Pair Corralation between Okta and Lyons Bancorp
Given the investment horizon of 90 days Okta Inc is expected to generate 1.59 times more return on investment than Lyons Bancorp. However, Okta is 1.59 times more volatile than Lyons Bancorp. It trades about 0.16 of its potential returns per unit of risk. Lyons Bancorp is currently generating about -0.03 per unit of risk. If you would invest 7,215 in Okta Inc on August 25, 2024 and sell it today you would earn a total of 442.00 from holding Okta Inc or generate 6.13% 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. Lyons Bancorp
Performance |
| Timeline |
| Okta Inc |
| Lyons Bancorp |
Okta and Lyons Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Lyons Bancorp
The main advantage of trading using opposite Okta and Lyons Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Lyons Bancorp 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 Lyons Bancorp will offset losses from the drop in Lyons Bancorp's long position.The idea behind Okta Inc and Lyons Bancorp 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.| Lyons Bancorp vs. FS Bancorp | Lyons Bancorp vs. Eastern Michigan Financial | Lyons Bancorp vs. Grand River Commerce | Lyons Bancorp vs. Bank of Botetourt |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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