Correlation Between Okta and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Okta and Sierra Tactical 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 Sierra Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Sierra Tactical Bond, you can compare the effects of market volatilities on Okta and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Sierra Tactical.
Diversification Opportunities for Okta and Sierra Tactical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Sierra is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Sierra Tactical Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Bond 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Bond has no effect on the direction of Okta i.e., Okta and Sierra Tactical go up and down completely randomly.
Pair Corralation between Okta and Sierra Tactical
Given the investment horizon of 90 days Okta Inc is expected to generate 10.78 times more return on investment than Sierra Tactical. However, Okta is 10.78 times more volatile than Sierra Tactical Bond. It trades about 0.03 of its potential returns per unit of risk. Sierra Tactical Bond is currently generating about 0.09 per unit of risk. If you would invest 6,194 in Okta Inc on August 26, 2024 and sell it today you would earn a total of 1,463 from holding Okta Inc or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Sierra Tactical Bond
Performance |
| Timeline |
| Okta Inc |
| Sierra Tactical Bond |
Okta and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Sierra Tactical
The main advantage of trading using opposite Okta and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical's long position.The idea behind Okta Inc and Sierra Tactical Bond 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.| Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Risk | Sierra Tactical vs. Sierra Tactical Bond |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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