Correlation Between Okta and SPDR Series
Can any of the company-specific risk be diversified away by investing in both Okta and SPDR Series 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 SPDR Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and SPDR Series Trust, you can compare the effects of market volatilities on Okta and SPDR Series 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 SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and SPDR Series.
Diversification Opportunities for Okta and SPDR Series
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and SPDR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of Okta i.e., Okta and SPDR Series go up and down completely randomly.
Pair Corralation between Okta and SPDR Series
Given the investment horizon of 90 days Okta Inc is not expected to generate positive returns. Moreover, Okta is 1.89 times more volatile than SPDR Series Trust. It trades away all of its potential returns to assume current level of volatility. SPDR Series Trust is currently generating about 0.08 per unit of risk. If you would invest 227,661 in SPDR Series Trust on August 28, 2024 and sell it today you would earn a total of 58,339 from holding SPDR Series Trust or generate 25.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.56% |
| Values | Daily Returns |
Okta Inc vs. SPDR Series Trust
Performance |
| Timeline |
| Okta Inc |
| SPDR Series Trust |
Okta and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and SPDR Series
The main advantage of trading using opposite Okta and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, SPDR Series 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 SPDR Series will offset losses from the drop in SPDR Series' long position.The idea behind Okta Inc and SPDR Series Trust 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.| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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