Correlation Between Okta and AAM Low
Can any of the company-specific risk be diversified away by investing in both Okta and AAM Low 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 AAM Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and AAM Low Duration, you can compare the effects of market volatilities on Okta and AAM Low 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 AAM Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and AAM Low.
Diversification Opportunities for Okta and AAM Low
Very good diversification
The 3 months correlation between Okta and AAM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and AAM Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAM Low Duration 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 AAM Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAM Low Duration has no effect on the direction of Okta i.e., Okta and AAM Low go up and down completely randomly.
Pair Corralation between Okta and AAM Low
Given the investment horizon of 90 days Okta Inc is expected to generate 8.39 times more return on investment than AAM Low. However, Okta is 8.39 times more volatile than AAM Low Duration. It trades about 0.03 of its potential returns per unit of risk. AAM Low Duration is currently generating about 0.1 per unit of risk. If you would invest 6,705 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 952.00 from holding Okta Inc or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. AAM Low Duration
Performance |
| Timeline |
| Okta Inc |
| AAM Low Duration |
Okta and AAM Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and AAM Low
The main advantage of trading using opposite Okta and AAM Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, AAM Low 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 AAM Low will offset losses from the drop in AAM Low's long position.The idea behind Okta Inc and AAM Low Duration 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.| AAM Low vs. Global X Variable | AAM Low vs. ETFis Series Trust | AAM Low vs. Innovator SP Investment | AAM Low vs. Principal Spectrum Preferred |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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