Correlation Between ONEOK and Waste Management
Can any of the company-specific risk be diversified away by investing in both ONEOK and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Waste Management, you can compare the effects of market volatilities on ONEOK and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Waste Management.
Diversification Opportunities for ONEOK and Waste Management
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ONEOK and Waste is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of ONEOK i.e., ONEOK and Waste Management go up and down completely randomly.
Pair Corralation between ONEOK and Waste Management
Assuming the 90 days trading horizon ONEOK Inc is expected to under-perform the Waste Management. In addition to that, ONEOK is 1.6 times more volatile than Waste Management. It trades about -0.1 of its total potential returns per unit of risk. Waste Management is currently generating about 0.39 per unit of volatility. If you would invest 20,184 in Waste Management on November 4, 2024 and sell it today you would earn a total of 1,947 from holding Waste Management or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ONEOK Inc vs. Waste Management
Performance |
| Timeline |
| ONEOK Inc |
| Waste Management |
ONEOK and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Waste Management
The main advantage of trading using opposite ONEOK and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| ONEOK vs. Universal Display Corp | ONEOK vs. Playtech Plc | ONEOK vs. Cairn Homes PLC | ONEOK vs. Cairo Communication SpA |
| Waste Management vs. Ecclesiastical Insurance Office | Waste Management vs. Tyson Foods Cl | Waste Management vs. Bell Food Group | Waste Management vs. Logitech International SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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