Correlation Between Okta and Nice
Can any of the company-specific risk be diversified away by investing in both Okta and Nice 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 Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Nice Ltd ADR, you can compare the effects of market volatilities on Okta and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Nice.
Diversification Opportunities for Okta and Nice
Weak diversification
The 3 months correlation between Okta and Nice is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Nice Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Ltd ADR 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Ltd ADR has no effect on the direction of Okta i.e., Okta and Nice go up and down completely randomly.
Pair Corralation between Okta and Nice
Given the investment horizon of 90 days Okta Inc is expected to generate 0.58 times more return on investment than Nice. However, Okta Inc is 1.71 times less risky than Nice. It trades about 0.16 of its potential returns per unit of risk. Nice Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest 7,224 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 433.00 from holding Okta Inc or generate 5.99% 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. Nice Ltd ADR
Performance |
| Timeline |
| Okta Inc |
| Nice Ltd ADR |
Okta and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Nice
The main advantage of trading using opposite Okta and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.The idea behind Okta Inc and Nice Ltd ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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