Correlation Between Okta and NeXGold Mining
Can any of the company-specific risk be diversified away by investing in both Okta and NeXGold Mining 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 NeXGold Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and NeXGold Mining Corp, you can compare the effects of market volatilities on Okta and NeXGold Mining 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 NeXGold Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and NeXGold Mining.
Diversification Opportunities for Okta and NeXGold Mining
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and NeXGold is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp 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 NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Okta i.e., Okta and NeXGold Mining go up and down completely randomly.
Pair Corralation between Okta and NeXGold Mining
Given the investment horizon of 90 days Okta Inc is expected to generate 0.61 times more return on investment than NeXGold Mining. However, Okta Inc is 1.64 times less risky than NeXGold Mining. It trades about 0.13 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.34 per unit of risk. If you would invest 7,325 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. NeXGold Mining Corp
Performance |
| Timeline |
| Okta Inc |
| NeXGold Mining Corp |
Okta and NeXGold Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and NeXGold Mining
The main advantage of trading using opposite Okta and NeXGold Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, NeXGold Mining 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 NeXGold Mining will offset losses from the drop in NeXGold Mining's long position.The idea behind Okta Inc and NeXGold Mining Corp 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.| NeXGold Mining vs. Bip Investment Corp | NeXGold Mining vs. Economic Investment Trust | NeXGold Mining vs. Faction Investment Group | NeXGold Mining vs. Plaza Retail REIT |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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