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

-0.35

Correlation Coefficient

Okta  SentinelOne

Very good diversification

The 3 months correlation between Okta and SentinelOne is -0.35. 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 Inc is expected to generate 0.87 times more return on investment than SentinelOne. However, Okta Inc is 1.15 times less risky than SentinelOne. It trades about -0.03 of its potential returns per unit of risk. SentinelOne is currently generating about -0.11 per unit of risk. If you would invest  9,090  in Okta Inc on November 28, 2024 and sell it today you would lose (156.00) from holding Okta Inc or give up 1.72% of portfolio value over 90 days.

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

Okta Inc  vs.  SentinelOne

Okta Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 9 (%) 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.

SentinelOne

Risk-Adjusted Performance

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.