Correlation Between Okta and IShares National
Can any of the company-specific risk be diversified away by investing in both Okta and IShares National 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 National 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 National Muni, you can compare the effects of market volatilities on Okta and IShares National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and IShares National.
Diversification Opportunities for Okta and IShares National
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and IShares is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and iShares National Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares National Muni 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares National Muni has no effect on the direction of Okta i.e., Okta and IShares National go up and down completely randomly.
Pair Corralation between Okta and IShares National
Given the investment horizon of 90 days Okta Inc is expected to generate 10.48 times more return on investment than IShares National. However, Okta is 10.48 times more volatile than iShares National Muni. It trades about 0.02 of its potential returns per unit of risk. iShares National Muni is currently generating about 0.06 per unit of risk. If you would invest 7,145 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 611.00 from holding Okta Inc or generate 8.55% 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. iShares National Muni
Performance |
| Timeline |
| Okta Inc |
| iShares National Muni |
Okta and IShares National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and IShares National
The main advantage of trading using opposite Okta and IShares National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, IShares National 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 National will offset losses from the drop in IShares National's long position.The idea behind Okta Inc and iShares National Muni 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 National vs. iShares JP Morgan | IShares National vs. iShares iBoxx Investment | IShares National vs. SPDR Nuveen Bloomberg | IShares National vs. iShares MBS ETF |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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