Correlation Between Okta and Xtrackers FTSE
Can any of the company-specific risk be diversified away by investing in both Okta and Xtrackers FTSE 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 Xtrackers FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Xtrackers FTSE 250, you can compare the effects of market volatilities on Okta and Xtrackers FTSE 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 Xtrackers FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Xtrackers FTSE.
Diversification Opportunities for Okta and Xtrackers FTSE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Okta and Xtrackers is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Xtrackers FTSE 250 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers FTSE 250 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 Xtrackers FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers FTSE 250 has no effect on the direction of Okta i.e., Okta and Xtrackers FTSE go up and down completely randomly.
Pair Corralation between Okta and Xtrackers FTSE
Given the investment horizon of 90 days Okta Inc is expected to generate 2.24 times more return on investment than Xtrackers FTSE. However, Okta is 2.24 times more volatile than Xtrackers FTSE 250. It trades about 0.12 of its potential returns per unit of risk. Xtrackers FTSE 250 is currently generating about -0.01 per unit of risk. If you would invest 7,325 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Xtrackers FTSE 250
Performance |
| Timeline |
| Okta Inc |
| Xtrackers FTSE 250 |
Okta and Xtrackers FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Xtrackers FTSE
The main advantage of trading using opposite Okta and Xtrackers FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Xtrackers FTSE 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 Xtrackers FTSE will offset losses from the drop in Xtrackers FTSE's long position.The idea behind Okta Inc and Xtrackers FTSE 250 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.| Xtrackers FTSE vs. Xtrackers MSCI | Xtrackers FTSE vs. Xtrackers Ie Plc | Xtrackers FTSE vs. Xtrackers Russell 2000 | Xtrackers FTSE vs. Xtrackers USD Corporate |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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