Correlation Between Okta and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Okta and Metropolitan West 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 Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Metropolitan West Investment, you can compare the effects of market volatilities on Okta and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Metropolitan West.
Diversification Opportunities for Okta and Metropolitan West
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Metropolitan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Metropolitan West Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Okta i.e., Okta and Metropolitan West go up and down completely randomly.
Pair Corralation between Okta and Metropolitan West
Given the investment horizon of 90 days Okta Inc is expected to generate 8.37 times more return on investment than Metropolitan West. However, Okta is 8.37 times more volatile than Metropolitan West Investment. It trades about 0.02 of its potential returns per unit of risk. Metropolitan West Investment is currently generating about 0.07 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 | 99.73% |
| Values | Daily Returns |
Okta Inc vs. Metropolitan West Investment
Performance |
| Timeline |
| Okta Inc |
| Metropolitan West |
Okta and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Metropolitan West
The main advantage of trading using opposite Okta and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.The idea behind Okta Inc and Metropolitan West 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.| Metropolitan West vs. The Short Term | Metropolitan West vs. Vanguard Institutional Short Term | Metropolitan West vs. Astor Longshort Fund | Metropolitan West vs. Barings Active Short |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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