Correlation Between Okta and Rocket Companies
Can any of the company-specific risk be diversified away by investing in both Okta and Rocket Companies 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 Rocket Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Rocket Companies, you can compare the effects of market volatilities on Okta and Rocket Companies 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 Rocket Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Rocket Companies.
Diversification Opportunities for Okta and Rocket Companies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Rocket is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies 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 Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Okta i.e., Okta and Rocket Companies go up and down completely randomly.
Pair Corralation between Okta and Rocket Companies
Given the investment horizon of 90 days Okta Inc is expected to generate 0.71 times more return on investment than Rocket Companies. However, Okta Inc is 1.41 times less risky than Rocket Companies. It trades about 0.16 of its potential returns per unit of risk. Rocket Companies is currently generating about -0.34 per unit of risk. If you would invest 7,215 in Okta Inc on August 25, 2024 and sell it today you would earn a total of 442.00 from holding Okta Inc or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Rocket Companies
Performance |
| Timeline |
| Okta Inc |
| Rocket Companies |
Okta and Rocket Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Rocket Companies
The main advantage of trading using opposite Okta and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Rocket Companies 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 Rocket Companies will offset losses from the drop in Rocket Companies' long position.The idea behind Okta Inc and Rocket Companies 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.| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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