Correlation Between Summit Materials and ONEOK
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials Cl and ONEOK Inc, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and ONEOK.
Diversification Opportunities for Summit Materials and ONEOK
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and ONEOK is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Summit Materials 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 Summit Materials Cl 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 Summit Materials i.e., Summit Materials and ONEOK go up and down completely randomly.
Pair Corralation between Summit Materials and ONEOK
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 1.49 times more return on investment than ONEOK. However, Summit Materials is 1.49 times more volatile than ONEOK Inc. It trades about 0.06 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.08 per unit of risk. If you would invest 2,966 in Summit Materials Cl on September 23, 2024 and sell it today you would earn a total of 2,084 from holding Summit Materials Cl or generate 70.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.74% |
| Values | Daily Returns |
Summit Materials Cl vs. ONEOK Inc
Performance |
| Timeline |
| Summit Materials |
| ONEOK Inc |
Summit Materials and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and ONEOK
The main advantage of trading using opposite Summit Materials and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Addtech | Summit Materials vs. Ashtead Technology Holdings | Summit Materials vs. British American Tobacco | Summit Materials vs. Universal Display Corp |
| 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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