Correlation Between Okta and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Okta and Sphere Entertainment 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 Sphere Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Sphere Entertainment Co, you can compare the effects of market volatilities on Okta and Sphere Entertainment 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 Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Sphere Entertainment.
Diversification Opportunities for Okta and Sphere Entertainment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and Sphere is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Okta i.e., Okta and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Okta and Sphere Entertainment
Given the investment horizon of 90 days Okta Inc is expected to generate 0.74 times more return on investment than Sphere Entertainment. However, Okta Inc is 1.35 times less risky than Sphere Entertainment. It trades about 0.13 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.15 per unit of risk. If you would invest 7,325 in Okta Inc on August 29, 2024 and sell it today you would earn a total of 358.00 from holding Okta Inc or generate 4.89% 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. Sphere Entertainment Co
Performance |
| Timeline |
| Okta Inc |
| Sphere Entertainment |
Okta and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Sphere Entertainment
The main advantage of trading using opposite Okta and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Sphere Entertainment 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.The idea behind Okta Inc and Sphere Entertainment Co 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.| Sphere Entertainment vs. MagnaChip Semiconductor | Sphere Entertainment vs. Taiwan Semiconductor Manufacturing | Sphere Entertainment vs. Vishay Intertechnology | Sphere Entertainment vs. Ryanair Holdings PLC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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