Correlation Between Okta and IShares Short
Can any of the company-specific risk be diversified away by investing in both Okta and IShares Short 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 IShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and iShares Short Maturity, you can compare the effects of market volatilities on Okta and IShares Short 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 IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and IShares Short.
Diversification Opportunities for Okta and IShares Short
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity 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 IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of Okta i.e., Okta and IShares Short go up and down completely randomly.
Pair Corralation between Okta and IShares Short
Given the investment horizon of 90 days Okta Inc is expected to generate 18.91 times more return on investment than IShares Short. However, Okta is 18.91 times more volatile than iShares Short Maturity. It trades about 0.12 of its potential returns per unit of risk. iShares Short Maturity is currently generating about 0.19 per unit of risk. If you would invest 7,216 in Okta Inc on August 24, 2024 and sell it today you would earn a total of 329.00 from holding Okta Inc or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. iShares Short Maturity
Performance |
| Timeline |
| Okta Inc |
| iShares Short Maturity |
Okta and IShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and IShares Short
The main advantage of trading using opposite Okta and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short's long position.The idea behind Okta Inc and iShares Short Maturity 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.| IShares Short vs. Dimensional ETF Trust | IShares Short vs. Dimensional ETF Trust | IShares Short vs. Dimensional ETF Trust | IShares Short vs. Dimensional Emerging Core |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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