Correlation Between Okta and AG Mortgage
Can any of the company-specific risk be diversified away by investing in both Okta and AG Mortgage 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 AG Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and AG Mortgage Investment, you can compare the effects of market volatilities on Okta and AG Mortgage 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 AG Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and AG Mortgage.
Diversification Opportunities for Okta and AG Mortgage
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and MITT-PB is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and AG Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AG Mortgage Investment 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 AG Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AG Mortgage Investment has no effect on the direction of Okta i.e., Okta and AG Mortgage go up and down completely randomly.
Pair Corralation between Okta and AG Mortgage
Given the investment horizon of 90 days Okta Inc is expected to generate 2.47 times more return on investment than AG Mortgage. However, Okta is 2.47 times more volatile than AG Mortgage Investment. It trades about 0.13 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about -0.05 per unit of risk. If you would invest 7,325 in Okta Inc on August 27, 2024 and sell it today you would earn a total of 332.00 from holding Okta Inc or generate 4.53% 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. AG Mortgage Investment
Performance |
| Timeline |
| Okta Inc |
| AG Mortgage Investment |
Okta and AG Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and AG Mortgage
The main advantage of trading using opposite Okta and AG Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, AG Mortgage 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 AG Mortgage will offset losses from the drop in AG Mortgage's long position.The idea behind Okta Inc and AG Mortgage Investment 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.| AG Mortgage vs. New York Mortgage | AG Mortgage vs. New York Mortgage | AG Mortgage vs. Two Harbors Investment | AG Mortgage vs. Two Harbors Investment |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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