Correlation Between Synopsys, and Okta

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

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

Diversification Opportunities for Synopsys, and Okta

0.22

Correlation Coefficient

Synopsys,  Okta

Modest diversification

The 3 months correlation between Synopsys, and Okta is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Synopsys, and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Synopsys, 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 Synopsys, 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 Synopsys, i.e., Synopsys, and Okta go up and down completely randomly.

Pair Corralation between Synopsys, and Okta

Assuming the 90 days trading horizon Synopsys, is expected to under-perform the Okta. In addition to that, Synopsys, is 1.3 times more volatile than Okta Inc. It trades about -0.29 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Synopsys,  vs.  Okta Inc

Synopsys,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Synopsys, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Synopsys, 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 Synopsys, and Okta

The main advantage of trading using opposite Synopsys, and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synopsys, 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 Synopsys, 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.