Correlation Between Okta and SPS Commerce
Can any of the company-specific risk be diversified away by investing in both Okta and SPS Commerce 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 SPS Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and SPS Commerce, you can compare the effects of market volatilities on Okta and SPS Commerce 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 SPS Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and SPS Commerce.
Diversification Opportunities for Okta and SPS Commerce
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and SPS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce 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 SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of Okta i.e., Okta and SPS Commerce go up and down completely randomly.
Pair Corralation between Okta and SPS Commerce
Given the investment horizon of 90 days Okta Inc is expected to generate 0.88 times more return on investment than SPS Commerce. However, Okta Inc is 1.14 times less risky than SPS Commerce. It trades about 0.1 of its potential returns per unit of risk. SPS Commerce is currently generating about 0.01 per unit of risk. If you would invest 7,486 in Okta Inc on September 25, 2024 and sell it today you would earn a total of 874.00 from holding Okta Inc or generate 11.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Okta Inc vs. SPS Commerce
Performance |
Timeline |
Okta Inc |
SPS Commerce |
Okta and SPS Commerce Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Okta and SPS Commerce
The main advantage of trading using opposite Okta and SPS Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, SPS Commerce 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 SPS Commerce will offset losses from the drop in SPS Commerce's long position.The idea behind Okta Inc and SPS Commerce 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.SPS Commerce vs. Tenable Holdings | SPS Commerce vs. Rapid7 Inc | SPS Commerce vs. F5 Networks | SPS Commerce vs. Check Point Software |
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.
Other Complementary Tools
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |