Correlation Between Okta and Profire Ene
Can any of the company-specific risk be diversified away by investing in both Okta and Profire Ene 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 Profire Ene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Profire Ene, you can compare the effects of market volatilities on Okta and Profire Ene 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 Profire Ene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Profire Ene.
Diversification Opportunities for Okta and Profire Ene
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Profire is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Profire Ene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profire Ene 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 Profire Ene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profire Ene has no effect on the direction of Okta i.e., Okta and Profire Ene go up and down completely randomly.
Pair Corralation between Okta and Profire Ene
Given the investment horizon of 90 days Okta is expected to generate 10.08 times less return on investment than Profire Ene. But when comparing it to its historical volatility, Okta Inc is 5.67 times less risky than Profire Ene. It trades about 0.13 of its potential returns per unit of risk. Profire Ene is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 81.00 from holding Profire Ene or generate 47.37% 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. Profire Ene
Performance |
| Timeline |
| Okta Inc |
| Profire Ene |
Okta and Profire Ene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Profire Ene
The main advantage of trading using opposite Okta and Profire Ene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Profire Ene 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 Profire Ene will offset losses from the drop in Profire Ene's long position.The idea behind Okta Inc and Profire Ene 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.| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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