Correlation Between Okta and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both Okta and Strickland Metals 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 Strickland Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Strickland Metals, you can compare the effects of market volatilities on Okta and Strickland Metals 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 Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Strickland Metals.
Diversification Opportunities for Okta and Strickland Metals
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and Strickland is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland Metals 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of Okta i.e., Okta and Strickland Metals go up and down completely randomly.
Pair Corralation between Okta and Strickland Metals
Given the investment horizon of 90 days Okta is expected to generate 3.67 times less return on investment than Strickland Metals. But when comparing it to its historical volatility, Okta Inc is 2.12 times less risky than Strickland Metals. It trades about 0.03 of its potential returns per unit of risk. Strickland Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.60 in Strickland Metals on August 29, 2024 and sell it today you would earn a total of 2.90 from holding Strickland Metals or generate 63.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Okta Inc vs. Strickland Metals
Performance |
| Timeline |
| Okta Inc |
| Strickland Metals |
Okta and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Strickland Metals
The main advantage of trading using opposite Okta and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Strickland Metals 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.The idea behind Okta Inc and Strickland Metals 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.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |