Correlation Between Okta and Compass Group
Can any of the company-specific risk be diversified away by investing in both Okta and Compass 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 Compass 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 Compass Group PLC, you can compare the effects of market volatilities on Okta and Compass 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Compass Group.
Diversification Opportunities for Okta and Compass Group
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Compass is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Okta i.e., Okta and Compass Group go up and down completely randomly.
Pair Corralation between Okta and Compass Group
Given the investment horizon of 90 days Okta is expected to generate 1.38 times less return on investment than Compass Group. In addition to that, Okta is 1.87 times more volatile than Compass Group PLC. It trades about 0.02 of its total potential returns per unit of risk. Compass Group PLC is currently generating about 0.06 per unit of volatility. If you would invest 2,512 in Compass Group PLC on August 31, 2024 and sell it today you would earn a total of 778.00 from holding Compass Group PLC or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Okta Inc vs. Compass Group PLC
Performance |
| Timeline |
| Okta Inc |
| Compass Group PLC |
Okta and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Compass Group
The main advantage of trading using opposite Okta and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Compass 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 Compass Group will offset losses from the drop in Compass Group's long position.The idea behind Okta Inc and Compass 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.| Compass Group vs. McDonalds | Compass Group vs. Starbucks | Compass Group vs. Restaurant Brands International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| CEOs Directory Screen CEOs from public companies around the world |