Correlation Between Okta and Gap,

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

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

Diversification Opportunities for Okta and Gap,

-0.78

Correlation Coefficient

Okta  Gap,

Pay attention - limited upside

The 3 months correlation between Okta and Gap, is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Okta i.e., Okta and Gap, go up and down completely randomly.

Pair Corralation between Okta and Gap,

Given the investment horizon of 90 days Okta Inc is expected to generate 1.07 times more return on investment than Gap,. However, Okta is 1.07 times more volatile than The Gap,. It trades about 0.16 of its potential returns per unit of risk. The Gap, is currently generating about -0.04 per unit of risk. If you would invest  8,302  in Okta Inc on December 26, 2024 and sell it today you would earn a total of  3,370  from holding Okta Inc or generate 40.59% return on investment over 90 days.

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

Okta Inc  vs.  The Gap,

Okta Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Okta and Gap,

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

The idea behind Okta Inc and The Gap, 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.