Correlation Between Okta and National Bank
Can any of the company-specific risk be diversified away by investing in both Okta and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and National Bank of, you can compare the effects of market volatilities on Okta and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and National Bank.
Diversification Opportunities for Okta and National Bank
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and National is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Okta i.e., Okta and National Bank go up and down completely randomly.
Pair Corralation between Okta and National Bank
Given the investment horizon of 90 days Okta Inc is expected to generate 0.75 times more return on investment than National Bank. However, Okta Inc is 1.33 times less risky than National Bank. It trades about 0.22 of its potential returns per unit of risk. National Bank of is currently generating about -0.24 per unit of risk. If you would invest 7,189 in Okta Inc on September 1, 2024 and sell it today you would earn a total of 567.00 from holding Okta Inc or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. National Bank of
Performance |
| Timeline |
| Okta Inc |
| National Bank |
Okta and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and National Bank
The main advantage of trading using opposite Okta and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.The idea behind Okta Inc and National Bank of 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.| National Bank vs. Piraeus Bank SA | National Bank vs. Turkiye Garanti Bankasi | National Bank vs. Delhi Bank Corp | National Bank vs. Uwharrie Capital Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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