Correlation Between Edgio and Okta

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

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

Diversification Opportunities for Edgio and Okta

0.13

Correlation Coefficient

Edgio  Okta

Average diversification

The 3 months correlation between Edgio and Okta is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Edgio Inc and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Edgio 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 Edgio Inc 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 Edgio i.e., Edgio and Okta go up and down completely randomly.

Pair Corralation between Edgio and Okta

Given the investment horizon of 90 days Edgio Inc is expected to generate 146.9 times more return on investment than Okta. However, Edgio is 146.9 times more volatile than Okta Inc. It trades about 0.23 of its potential returns per unit of risk. Okta Inc is currently generating about 0.03 per unit of risk. If you would invest  650.00  in Edgio Inc on September 1, 2024 and sell it today you would lose (648.00) from holding Edgio Inc or give up 99.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Edgio Inc  vs.  Okta Inc

Edgio Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Edgio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very abnormal forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

Okta Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Okta is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Edgio and Okta

The main advantage of trading using opposite Edgio and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgio 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 Edgio Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.