Correlation Between Okta and Endava

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

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

Diversification Opportunities for Okta and Endava

0.81

Correlation Coefficient

Okta  Endava

Very poor diversification

The 3 months correlation between Okta and Endava is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Endava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endava 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 Endava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endava has no effect on the direction of Okta i.e., Okta and Endava go up and down completely randomly.

Pair Corralation between Okta and Endava

Given the investment horizon of 90 days Okta Inc is expected to generate 0.84 times more return on investment than Endava. However, Okta Inc is 1.19 times less risky than Endava. It trades about 0.02 of its potential returns per unit of risk. Endava is currently generating about -0.04 per unit of risk. If you would invest  7,112  in Okta Inc on October 6, 2024 and sell it today you would earn a total of  964.00  from holding Okta Inc or generate 13.55% return on investment over 90 days.

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

Okta Inc  vs.  Endava

Okta Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Endava

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endava are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Endava sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Okta and Endava

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

The idea behind Okta Inc and Endava 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.