Correlation Between Okta and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both Okta and Horizon Kinetics 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 Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Horizon Kinetics Medical, you can compare the effects of market volatilities on Okta and Horizon Kinetics 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 Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Horizon Kinetics.
Diversification Opportunities for Okta and Horizon Kinetics
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Okta and Horizon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical 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 Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Medical has no effect on the direction of Okta i.e., Okta and Horizon Kinetics go up and down completely randomly.
Pair Corralation between Okta and Horizon Kinetics
Given the investment horizon of 90 days Okta Inc is expected to generate 1.42 times more return on investment than Horizon Kinetics. However, Okta is 1.42 times more volatile than Horizon Kinetics Medical. It trades about 0.4 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about 0.2 per unit of risk. If you would invest 8,438 in Okta Inc on November 5, 2024 and sell it today you would earn a total of 984.00 from holding Okta Inc or generate 11.66% 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. Horizon Kinetics Medical
Performance |
| Timeline |
| Okta Inc |
| Horizon Kinetics Medical |
Okta and Horizon Kinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Horizon Kinetics
The main advantage of trading using opposite Okta and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Horizon Kinetics 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 Horizon Kinetics will offset losses from the drop in Horizon Kinetics' long position.The idea behind Okta Inc and Horizon Kinetics Medical 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.| Horizon Kinetics vs. Harbor Health Care | Horizon Kinetics vs. Myriad Genetics | Horizon Kinetics vs. Genenta Science SpA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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