Correlation Between Automatic Data and ONEOK
Can any of the company-specific risk be diversified away by investing in both Automatic Data and ONEOK 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 Automatic Data and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and ONEOK Inc, you can compare the effects of market volatilities on Automatic Data and ONEOK 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 Automatic Data with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and ONEOK.
Diversification Opportunities for Automatic Data and ONEOK
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automatic and ONEOK is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Automatic Data 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 Automatic Data Processing are associated (or correlated) with ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Automatic Data i.e., Automatic Data and ONEOK go up and down completely randomly.
Pair Corralation between Automatic Data and ONEOK
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 4.09 times more return on investment than ONEOK. However, Automatic Data is 4.09 times more volatile than ONEOK Inc. It trades about 0.03 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.08 per unit of risk. If you would invest 22,591 in Automatic Data Processing on September 23, 2024 and sell it today you would earn a total of 6,796 from holding Automatic Data Processing or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Automatic Data Processing vs. ONEOK Inc
Performance |
| Timeline |
| Automatic Data Processing |
| ONEOK Inc |
Automatic Data and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and ONEOK
The main advantage of trading using opposite Automatic Data and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, ONEOK 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 ONEOK will offset losses from the drop in ONEOK's long position.| Automatic Data vs. Playtech Plc | Automatic Data vs. Metals Exploration Plc | Automatic Data vs. Trainline Plc | Automatic Data vs. Fulcrum Metals PLC |
| ONEOK vs. Uniper SE | ONEOK vs. Mulberry Group PLC | ONEOK vs. London Security Plc | ONEOK vs. Triad Group PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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