Correlation Between Okta and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Okta and Mfs Utilities 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 Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Mfs Utilities Fund, you can compare the effects of market volatilities on Okta and Mfs Utilities 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 Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Mfs Utilities.
Diversification Opportunities for Okta and Mfs Utilities
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Mfs is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities 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 Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Okta i.e., Okta and Mfs Utilities go up and down completely randomly.
Pair Corralation between Okta and Mfs Utilities
Given the investment horizon of 90 days Okta Inc is expected to generate 1.91 times more return on investment than Mfs Utilities. However, Okta is 1.91 times more volatile than Mfs Utilities Fund. It trades about 0.05 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.01 per unit of risk. If you would invest 7,434 in Okta Inc on August 30, 2024 and sell it today you would earn a total of 208.00 from holding Okta Inc or generate 2.8% 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. Mfs Utilities Fund
Performance |
| Timeline |
| Okta Inc |
| Mfs Utilities |
Okta and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Mfs Utilities
The main advantage of trading using opposite Okta and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Mfs Utilities 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 Mfs Utilities will offset losses from the drop in Mfs Utilities' long position.The idea behind Okta Inc and Mfs Utilities Fund 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.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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