Correlation Between ONEOK and OTP Bank
Can any of the company-specific risk be diversified away by investing in both ONEOK and OTP Bank 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 OTP Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and OTP Bank Nyrt, you can compare the effects of market volatilities on ONEOK and OTP Bank 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 OTP Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and OTP Bank.
Diversification Opportunities for ONEOK and OTP Bank
Significant diversification
The 3 months correlation between ONEOK and OTP is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt 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 OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of ONEOK i.e., ONEOK and OTP Bank go up and down completely randomly.
Pair Corralation between ONEOK and OTP Bank
Assuming the 90 days trading horizon ONEOK is expected to generate 1.43 times less return on investment than OTP Bank. But when comparing it to its historical volatility, ONEOK Inc is 3.93 times less risky than OTP Bank. It trades about 0.08 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,176,324 in OTP Bank Nyrt on September 23, 2024 and sell it today you would earn a total of 82,676 from holding OTP Bank Nyrt or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
ONEOK Inc vs. OTP Bank Nyrt
Performance |
| Timeline |
| ONEOK Inc |
| OTP Bank Nyrt |
ONEOK and OTP Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and OTP Bank
The main advantage of trading using opposite ONEOK and OTP Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, OTP Bank 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 OTP Bank will offset losses from the drop in OTP Bank's long position.| ONEOK vs. Fevertree Drinks Plc | ONEOK vs. Foresight Environmental Infrastructure | ONEOK vs. Fortune Brands Home | ONEOK vs. Silver Bullet Data |
| OTP Bank vs. Hilton Food Group | OTP Bank vs. Veolia Environnement VE | OTP Bank vs. Charter Communications Cl | OTP Bank vs. Ironveld 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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