Correlation Between Charter Communications and Okta

Can any of the company-specific risk be diversified away by investing in both Charter Communications and Okta 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 Charter Communications and Okta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications and Okta Inc, you can compare the effects of market volatilities on Charter Communications and Okta 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 Charter Communications with a short position of Okta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Okta.

Diversification Opportunities for Charter Communications and Okta

0.4

Correlation Coefficient

Charter Communications  Okta

Very weak diversification

The 3 months correlation between Charter and Okta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Charter Communications 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 Charter Communications are associated (or correlated) with Okta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okta Inc has no effect on the direction of Charter Communications i.e., Charter Communications and Okta go up and down completely randomly.

Pair Corralation between Charter Communications and Okta

Assuming the 90 days trading horizon Charter Communications is expected to under-perform the Okta. In addition to that, Charter Communications is 1.16 times more volatile than Okta Inc. It trades about -0.23 of its total potential returns per unit of risk. Okta Inc is currently generating about -0.12 per unit of volatility. If you would invest  2,594  in Okta Inc on October 5, 2024 and sell it today you would lose (152.00) from holding Okta Inc or give up 5.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Charter Communications  vs.  Okta Inc

Charter Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Charter Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Okta Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Okta

The main advantage of trading using opposite Charter Communications and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications position performs unexpectedly, Okta 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 Okta will offset losses from the drop in Okta's long position.

The idea behind Charter Communications and Okta Inc 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.