Correlation Between Okta and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Okta and Vodafone Group 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 Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Vodafone Group Plc, you can compare the effects of market volatilities on Okta and Vodafone Group 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 Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Vodafone Group.
Diversification Opportunities for Okta and Vodafone Group
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Vodafone is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Vodafone Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Plc 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Plc has no effect on the direction of Okta i.e., Okta and Vodafone Group go up and down completely randomly.
Pair Corralation between Okta and Vodafone Group
Given the investment horizon of 90 days Okta Inc is expected to generate 0.83 times more return on investment than Vodafone Group. However, Okta Inc is 1.2 times less risky than Vodafone Group. It trades about 0.15 of its potential returns per unit of risk. Vodafone Group Plc is currently generating about -0.01 per unit of risk. If you would invest 7,240 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 402.00 from holding Okta Inc or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Okta Inc vs. Vodafone Group Plc
Performance |
| Timeline |
| Okta Inc |
| Vodafone Group Plc |
Okta and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Vodafone Group
The main advantage of trading using opposite Okta and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Vodafone Group 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 Vodafone Group will offset losses from the drop in Vodafone Group's long position.The idea behind Okta Inc and Vodafone Group Plc 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.| Vodafone Group vs. Deutsche Bank Aktiengesellschaft | Vodafone Group vs. First Republic Bank | Vodafone Group vs. Monster Beverage Corp | Vodafone Group vs. Grupo Sports World |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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