Correlation Between Okta and Sempra
Can any of the company-specific risk be diversified away by investing in both Okta and Sempra 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 Sempra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Sempra, you can compare the effects of market volatilities on Okta and Sempra 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 Sempra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Sempra.
Diversification Opportunities for Okta and Sempra
Good diversification
The 3 months correlation between Okta and Sempra is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Sempra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sempra 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 Sempra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sempra has no effect on the direction of Okta i.e., Okta and Sempra go up and down completely randomly.
Pair Corralation between Okta and Sempra
Given the investment horizon of 90 days Okta is expected to generate 1.02 times less return on investment than Sempra. In addition to that, Okta is 2.11 times more volatile than Sempra. It trades about 0.02 of its total potential returns per unit of risk. Sempra is currently generating about 0.05 per unit of volatility. If you would invest 6,794 in Sempra on August 28, 2024 and sell it today you would earn a total of 2,210 from holding Sempra or generate 32.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.35% |
| Values | Daily Returns |
Okta Inc vs. Sempra
Performance |
| Timeline |
| Okta Inc |
| Sempra |
Okta and Sempra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Sempra
The main advantage of trading using opposite Okta and Sempra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Sempra 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 Sempra will offset losses from the drop in Sempra's long position.The idea behind Okta Inc and Sempra 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.| Sempra vs. Retail Estates NV | Sempra vs. Beazer Homes USA | Sempra vs. National Retail Properties | Sempra vs. HomeToGo SE |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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