Correlation Between Okta and Tempur Sealy

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Can any of the company-specific risk be diversified away by investing in both Okta and Tempur Sealy 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 Tempur Sealy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Tempur Sealy International, you can compare the effects of market volatilities on Okta and Tempur Sealy 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 Tempur Sealy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Tempur Sealy.

Diversification Opportunities for Okta and Tempur Sealy

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Okta and Tempur is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Tempur Sealy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempur Sealy Interna 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 Tempur Sealy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempur Sealy Interna has no effect on the direction of Okta i.e., Okta and Tempur Sealy go up and down completely randomly.

Pair Corralation between Okta and Tempur Sealy

Given the investment horizon of 90 days Okta is expected to generate 1.6 times less return on investment than Tempur Sealy. In addition to that, Okta is 1.41 times more volatile than Tempur Sealy International. It trades about 0.03 of its total potential returns per unit of risk. Tempur Sealy International is currently generating about 0.07 per unit of volatility. If you would invest  3,105  in Tempur Sealy International on August 27, 2024 and sell it today you would earn a total of  2,369  from holding Tempur Sealy International or generate 76.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Okta Inc  vs.  Tempur Sealy International

 Performance 
       Timeline  
Okta Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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Very Weak
Over the last 90 days Okta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Tempur Sealy Interna 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Tempur Sealy International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tempur Sealy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Okta and Tempur Sealy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Okta and Tempur Sealy

The main advantage of trading using opposite Okta and Tempur Sealy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Tempur Sealy 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 Tempur Sealy will offset losses from the drop in Tempur Sealy's long position.
The idea behind Okta Inc and Tempur Sealy International 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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