Correlation Between Check Point and Okta

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

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

Diversification Opportunities for Check Point and Okta

-0.06

Correlation Coefficient

Check Point  Okta

Good diversification

The 3 months correlation between Check and Okta is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Okta go up and down completely randomly.

Pair Corralation between Check Point and Okta

Given the investment horizon of 90 days Check Point is expected to generate 1.87 times less return on investment than Okta. But when comparing it to its historical volatility, Check Point Software is 1.54 times less risky than Okta. It trades about 0.18 of its potential returns per unit of risk. Okta Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7,369  in Okta Inc on September 21, 2024 and sell it today you would earn a total of  800.00  from holding Okta Inc or generate 10.86% return on investment over 90 days.

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

Check Point Software  vs.  Okta Inc

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Check Point is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Okta Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and Okta

The main advantage of trading using opposite Check Point and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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 Check Point Software 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.