Correlation Between Okta and Sun Life
Can any of the company-specific risk be diversified away by investing in both Okta and Sun Life 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 Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Sun Life Non, you can compare the effects of market volatilities on Okta and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Sun Life.
Diversification Opportunities for Okta and Sun Life
Significant diversification
The 3 months correlation between Okta and Sun is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Sun Life Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Non 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Non has no effect on the direction of Okta i.e., Okta and Sun Life go up and down completely randomly.
Pair Corralation between Okta and Sun Life
Given the investment horizon of 90 days Okta is expected to generate 2.6 times less return on investment than Sun Life. In addition to that, Okta is 2.96 times more volatile than Sun Life Non. It trades about 0.01 of its total potential returns per unit of risk. Sun Life Non is currently generating about 0.09 per unit of volatility. If you would invest 1,188 in Sun Life Non on August 29, 2024 and sell it today you would earn a total of 453.00 from holding Sun Life Non or generate 38.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Okta Inc vs. Sun Life Non
Performance |
| Timeline |
| Okta Inc |
| Sun Life Non |
Okta and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Sun Life
The main advantage of trading using opposite Okta and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.The idea behind Okta Inc and Sun Life Non 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.| Sun Life vs. Forstrong Global Income | Sun Life vs. BMO Aggregate Bond | Sun Life vs. Terreno Resources Corp | Sun Life vs. iShares Canadian HYBrid |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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