Correlation Between Okta and Rave Restaurant
Can any of the company-specific risk be diversified away by investing in both Okta and Rave Restaurant 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 Rave Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Rave Restaurant Group, you can compare the effects of market volatilities on Okta and Rave Restaurant 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 Rave Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Rave Restaurant.
Diversification Opportunities for Okta and Rave Restaurant
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Rave is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group 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 Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Okta i.e., Okta and Rave Restaurant go up and down completely randomly.
Pair Corralation between Okta and Rave Restaurant
Given the investment horizon of 90 days Okta Inc is expected to generate 0.58 times more return on investment than Rave Restaurant. However, Okta Inc is 1.73 times less risky than Rave Restaurant. It trades about 0.13 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Rave Restaurant Group
Performance |
| Timeline |
| Okta Inc |
| Rave Restaurant Group |
Okta and Rave Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Rave Restaurant
The main advantage of trading using opposite Okta and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.The idea behind Okta Inc and Rave Restaurant Group 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.| Rave Restaurant vs. Ark Restaurants Corp | Rave Restaurant vs. One Group Hospitality | Rave Restaurant vs. Flanigans Enterprises | Rave Restaurant vs. Noble Romans |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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