Correlation Between Block and Okta

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

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

Diversification Opportunities for Block and Okta

-0.81

Correlation Coefficient

Block  Okta

Pay attention - limited upside

The 3 months correlation between Block and Okta is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Block Inc and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Block 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 Block 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 Block i.e., Block and Okta go up and down completely randomly.

Pair Corralation between Block and Okta

Assuming the 90 days trading horizon Block Inc is expected to under-perform the Okta. In addition to that, Block is 1.19 times more volatile than Okta Inc. It trades about -0.19 of its total potential returns per unit of risk. Okta Inc is currently generating about 0.12 per unit of volatility. If you would invest  2,457  in Okta Inc on December 30, 2024 and sell it today you would earn a total of  678.00  from holding Okta Inc or generate 27.59% return on investment over 90 days.

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

Block Inc  vs.  Okta Inc

Block Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Block Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 uncertain forward-looking signals, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Block and Okta

The main advantage of trading using opposite Block and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Block 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 Block 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .