Correlation Between Okta and Toast
Can any of the company-specific risk be diversified away by investing in both Okta and Toast 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 Toast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Toast Inc, you can compare the effects of market volatilities on Okta and Toast 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 Toast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Toast.
Diversification Opportunities for Okta and Toast
Very weak diversification
The 3 months correlation between Okta and Toast is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Toast Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toast Inc 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 Toast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toast Inc has no effect on the direction of Okta i.e., Okta and Toast go up and down completely randomly.
Pair Corralation between Okta and Toast
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Toast. In addition to that, Okta is 1.03 times more volatile than Toast Inc. It trades about -0.06 of its total potential returns per unit of risk. Toast Inc is currently generating about 0.09 per unit of volatility. If you would invest 3,615 in Toast Inc on March 22, 2025 and sell it today you would earn a total of 620.00 from holding Toast Inc or generate 17.15% 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. Toast Inc
Performance |
| Timeline |
| Okta Inc |
| Toast Inc |
Okta and Toast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Toast
The main advantage of trading using opposite Okta and Toast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Toast 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 Toast will offset losses from the drop in Toast's long position.The idea behind Okta Inc and Toast 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.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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