Correlation Between Okta and Tower Investments
Can any of the company-specific risk be diversified away by investing in both Okta and Tower Investments 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 Tower Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Tower Investments SA, you can compare the effects of market volatilities on Okta and Tower Investments 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 Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Tower Investments.
Diversification Opportunities for Okta and Tower Investments
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Tower is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower 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 Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of Okta i.e., Okta and Tower Investments go up and down completely randomly.
Pair Corralation between Okta and Tower Investments
Given the investment horizon of 90 days Okta Inc is expected to generate 0.47 times more return on investment than Tower Investments. However, Okta Inc is 2.14 times less risky than Tower Investments. It trades about 0.1 of its potential returns per unit of risk. Tower Investments SA is currently generating about -0.01 per unit of risk. If you would invest 7,381 in Okta Inc on August 30, 2024 and sell it today you would earn a total of 261.00 from holding Okta Inc or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Okta Inc vs. Tower Investments SA
Performance |
| Timeline |
| Okta Inc |
| Tower Investments |
Okta and Tower Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Tower Investments
The main advantage of trading using opposite Okta and Tower Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Tower Investments 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 Tower Investments will offset losses from the drop in Tower Investments' long position.The idea behind Okta Inc and Tower Investments SA 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.| Tower Investments vs. TEN SQUARE GAMES | Tower Investments vs. SOFTWARE MANSION SPOLKA | Tower Investments vs. Enter Air SA | Tower Investments vs. Inter Cars SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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