Correlation Between Okta and SentinelOne

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

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

Diversification Opportunities for Okta and SentinelOne

0.24

Correlation Coefficient

Okta  SentinelOne

Modest diversification

The 3 months correlation between Okta and SentinelOne is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne 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 SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Okta i.e., Okta and SentinelOne go up and down completely randomly.

Pair Corralation between Okta and SentinelOne

Given the investment horizon of 90 days Okta is expected to generate 7.9 times less return on investment than SentinelOne. But when comparing it to its historical volatility, Okta Inc is 1.57 times less risky than SentinelOne. It trades about 0.03 of its potential returns per unit of risk. SentinelOne is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,288  in SentinelOne on September 1, 2024 and sell it today you would earn a total of  507.00  from holding SentinelOne or generate 22.16% return on investment over 90 days.

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

Okta Inc  vs.  SentinelOne

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.

SentinelOne

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Okta and SentinelOne

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

The idea behind Okta Inc and SentinelOne 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.