Correlation Between Okta and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Okta and Ensign Energy 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 Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Ensign Energy Services, you can compare the effects of market volatilities on Okta and Ensign Energy 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 Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Ensign Energy.
Diversification Opportunities for Okta and Ensign Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Ensign is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services 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 Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of Okta i.e., Okta and Ensign Energy go up and down completely randomly.
Pair Corralation between Okta and Ensign Energy
Given the investment horizon of 90 days Okta is expected to generate 2.12 times less return on investment than Ensign Energy. But when comparing it to its historical volatility, Okta Inc is 1.27 times less risky than Ensign Energy. It trades about 0.1 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 269.00 in Ensign Energy Services on August 30, 2024 and sell it today you would earn a total of 22.00 from holding Ensign Energy Services or generate 8.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Okta Inc vs. Ensign Energy Services
Performance |
| Timeline |
| Okta Inc |
| Ensign Energy Services |
Okta and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Ensign Energy
The main advantage of trading using opposite Okta and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Ensign Energy 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 Ensign Energy will offset losses from the drop in Ensign Energy's long position.The idea behind Okta Inc and Ensign Energy Services 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.| Ensign Energy vs. Precision Drilling | Ensign Energy vs. Trican Well Service | Ensign Energy vs. Calfrac Well Services | Ensign Energy vs. NuVista Energy |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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