Correlation Between Okta and Rithm Capital
Can any of the company-specific risk be diversified away by investing in both Okta and Rithm Capital 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 Rithm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Rithm Capital Corp, you can compare the effects of market volatilities on Okta and Rithm Capital 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 Rithm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Rithm Capital.
Diversification Opportunities for Okta and Rithm Capital
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Rithm is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Rithm Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Capital Corp 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 Rithm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Capital Corp has no effect on the direction of Okta i.e., Okta and Rithm Capital go up and down completely randomly.
Pair Corralation between Okta and Rithm Capital
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Rithm Capital. In addition to that, Okta is 6.63 times more volatile than Rithm Capital Corp. It trades about -0.03 of its total potential returns per unit of risk. Rithm Capital Corp is currently generating about 0.13 per unit of volatility. If you would invest 2,300 in Rithm Capital Corp on August 31, 2024 and sell it today you would earn a total of 136.00 from holding Rithm Capital Corp or generate 5.91% 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. Rithm Capital Corp
Performance |
| Timeline |
| Okta Inc |
| Rithm Capital Corp |
Okta and Rithm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Rithm Capital
The main advantage of trading using opposite Okta and Rithm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Rithm Capital 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 Rithm Capital will offset losses from the drop in Rithm Capital's long position.The idea behind Okta Inc and Rithm Capital Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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