Correlation Between SoftBank Group and ONEOK
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and ONEOK Inc, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and ONEOK.
Diversification Opportunities for SoftBank Group and ONEOK
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoftBank and ONEOK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and ONEOK go up and down completely randomly.
Pair Corralation between SoftBank Group and ONEOK
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 1.76 times more return on investment than ONEOK. However, SoftBank Group is 1.76 times more volatile than ONEOK Inc. It trades about 0.05 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.08 per unit of risk. If you would invest 555,735 in SoftBank Group Corp on September 23, 2024 and sell it today you would earn a total of 320,265 from holding SoftBank Group Corp or generate 57.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.86% |
| Values | Daily Returns |
SoftBank Group Corp vs. ONEOK Inc
Performance |
| Timeline |
| SoftBank Group Corp |
| ONEOK Inc |
SoftBank Group and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and ONEOK
The main advantage of trading using opposite SoftBank Group and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Pentair PLC | SoftBank Group vs. Finnair Oyj | SoftBank Group vs. Fair Oaks Income | SoftBank Group vs. Solstad Offshore ASA |
| ONEOK vs. Fevertree Drinks Plc | ONEOK vs. Foresight Environmental Infrastructure | ONEOK vs. Fortune Brands Home | ONEOK vs. Silver Bullet Data |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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