Correlation Between Okta and Renta 4
Can any of the company-specific risk be diversified away by investing in both Okta and Renta 4 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 Renta 4 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Renta 4 Banco, you can compare the effects of market volatilities on Okta and Renta 4 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 Renta 4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Renta 4.
Diversification Opportunities for Okta and Renta 4
Good diversification
The 3 months correlation between Okta and Renta is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Renta 4 Banco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renta 4 Banco 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 Renta 4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renta 4 Banco has no effect on the direction of Okta i.e., Okta and Renta 4 go up and down completely randomly.
Pair Corralation between Okta and Renta 4
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Renta 4. In addition to that, Okta is 1.39 times more volatile than Renta 4 Banco. It trades about -0.03 of its total potential returns per unit of risk. Renta 4 Banco is currently generating about 0.12 per unit of volatility. If you would invest 1,016 in Renta 4 Banco on August 30, 2024 and sell it today you would earn a total of 274.00 from holding Renta 4 Banco or generate 26.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Okta Inc vs. Renta 4 Banco
Performance |
| Timeline |
| Okta Inc |
| Renta 4 Banco |
Okta and Renta 4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Renta 4
The main advantage of trading using opposite Okta and Renta 4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Renta 4 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 Renta 4 will offset losses from the drop in Renta 4's long position.The idea behind Okta Inc and Renta 4 Banco 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.| Renta 4 vs. Grupo Catalana Occidente | Renta 4 vs. Miquel y Costas | Renta 4 vs. Faes Farma SA | Renta 4 vs. Azkoyen |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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