Correlation Between Okta and Vanguard Utilities
Can any of the company-specific risk be diversified away by investing in both Okta and Vanguard Utilities 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 Vanguard Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Vanguard Utilities Index, you can compare the effects of market volatilities on Okta and Vanguard Utilities 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 Vanguard Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Vanguard Utilities.
Diversification Opportunities for Okta and Vanguard Utilities
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Okta and Vanguard is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Vanguard Utilities Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Utilities Index 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 Vanguard Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Utilities Index has no effect on the direction of Okta i.e., Okta and Vanguard Utilities go up and down completely randomly.
Pair Corralation between Okta and Vanguard Utilities
Given the investment horizon of 90 days Okta Inc is expected to generate 1.53 times more return on investment than Vanguard Utilities. However, Okta is 1.53 times more volatile than Vanguard Utilities Index. It trades about 0.16 of its potential returns per unit of risk. Vanguard Utilities Index is currently generating about 0.02 per unit of risk. If you would invest 7,215 in Okta Inc on August 25, 2024 and sell it today you would earn a total of 442.00 from holding Okta Inc or generate 6.13% 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. Vanguard Utilities Index
Performance |
| Timeline |
| Okta Inc |
| Vanguard Utilities Index |
Okta and Vanguard Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Vanguard Utilities
The main advantage of trading using opposite Okta and Vanguard Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Vanguard Utilities 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 Vanguard Utilities will offset losses from the drop in Vanguard Utilities' long position.The idea behind Okta Inc and Vanguard Utilities Index 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.| Vanguard Utilities vs. Vanguard Consumer Staples | Vanguard Utilities vs. Vanguard Materials Index | Vanguard Utilities vs. Vanguard Communication Services | Vanguard Utilities vs. Vanguard Financials Index |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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