Correlation Between ONEOK and Alliance Data
Can any of the company-specific risk be diversified away by investing in both ONEOK and Alliance Data 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 ONEOK and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Alliance Data Systems, you can compare the effects of market volatilities on ONEOK and Alliance Data 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 ONEOK with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Alliance Data.
Diversification Opportunities for ONEOK and Alliance Data
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ONEOK and Alliance is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and ONEOK 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 ONEOK Inc are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of ONEOK i.e., ONEOK and Alliance Data go up and down completely randomly.
Pair Corralation between ONEOK and Alliance Data
Assuming the 90 days trading horizon ONEOK Inc is expected to under-perform the Alliance Data. But the stock apears to be less risky and, when comparing its historical volatility, ONEOK Inc is 1.46 times less risky than Alliance Data. The stock trades about -0.1 of its potential returns per unit of risk. The Alliance Data Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,154 in Alliance Data Systems on November 4, 2024 and sell it today you would earn a total of 118.00 from holding Alliance Data Systems or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
ONEOK Inc vs. Alliance Data Systems
Performance |
| Timeline |
| ONEOK Inc |
| Alliance Data Systems |
ONEOK and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Alliance Data
The main advantage of trading using opposite ONEOK and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| ONEOK vs. Universal Display Corp | ONEOK vs. Playtech Plc | ONEOK vs. Cairn Homes PLC | ONEOK vs. Cairo Communication SpA |
| Alliance Data vs. Edinburgh Investment Trust | Alliance Data vs. Chrysalis Investments | Alliance Data vs. Lowland Investment Co | Alliance Data vs. Ecclesiastical Insurance Office |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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