Correlation Between Okta and Praxis Growth
Can any of the company-specific risk be diversified away by investing in both Okta and Praxis Growth 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 Praxis Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Praxis Growth Index, you can compare the effects of market volatilities on Okta and Praxis Growth 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 Praxis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Praxis Growth.
Diversification Opportunities for Okta and Praxis Growth
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Praxis is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Praxis Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Praxis Growth Index 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 Praxis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Praxis Growth Index has no effect on the direction of Okta i.e., Okta and Praxis Growth go up and down completely randomly.
Pair Corralation between Okta and Praxis Growth
Given the investment horizon of 90 days Okta Inc is expected to generate 1.61 times more return on investment than Praxis Growth. However, Okta is 1.61 times more volatile than Praxis Growth Index. It trades about 0.13 of its potential returns per unit of risk. Praxis Growth Index is currently generating about 0.07 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Praxis Growth Index
Performance |
| Timeline |
| Okta Inc |
| Praxis Growth Index |
Okta and Praxis Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Praxis Growth
The main advantage of trading using opposite Okta and Praxis Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Praxis Growth 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 Praxis Growth will offset losses from the drop in Praxis Growth's long position.The idea behind Okta Inc and Praxis Growth Index 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.| Praxis Growth vs. Praxis Small Cap | Praxis Growth vs. Praxis Small Cap | Praxis Growth vs. Praxis International Index | Praxis Growth vs. Praxis Value Index |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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