Correlation Between Okta and Summit Global
Can any of the company-specific risk be diversified away by investing in both Okta and Summit Global 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 Summit Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Summit Global Investments, you can compare the effects of market volatilities on Okta and Summit Global 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 Summit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Summit Global.
Diversification Opportunities for Okta and Summit Global
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and Summit is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Summit Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Global Investments 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 Summit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Global Investments has no effect on the direction of Okta i.e., Okta and Summit Global go up and down completely randomly.
Pair Corralation between Okta and Summit Global
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Summit Global. In addition to that, Okta is 3.05 times more volatile than Summit Global Investments. It trades about -0.02 of its total potential returns per unit of risk. Summit Global Investments is currently generating about 0.02 per unit of volatility. If you would invest 4,013 in Summit Global Investments on August 29, 2024 and sell it today you would earn a total of 31.00 from holding Summit Global Investments or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Summit Global Investments
Performance |
| Timeline |
| Okta Inc |
| Summit Global Investments |
Okta and Summit Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Summit Global
The main advantage of trading using opposite Okta and Summit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Summit Global 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 Summit Global will offset losses from the drop in Summit Global's long position.The idea behind Okta Inc and Summit Global Investments 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.| Summit Global vs. Summit Global Investments | Summit Global vs. Summit Global Investments | Summit Global vs. Summit Global Investments |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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