Correlation Between HSBC Holdings and ONEOK
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings 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 HSBC Holdings and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings PLC and ONEOK Inc, you can compare the effects of market volatilities on HSBC Holdings 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 HSBC Holdings with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and ONEOK.
Diversification Opportunities for HSBC Holdings and ONEOK
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and ONEOK is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and HSBC Holdings 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 HSBC Holdings PLC 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 HSBC Holdings i.e., HSBC Holdings and ONEOK go up and down completely randomly.
Pair Corralation between HSBC Holdings and ONEOK
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.08 times less return on investment than ONEOK. But when comparing it to its historical volatility, HSBC Holdings PLC is 1.16 times less risky than ONEOK. It trades about 0.09 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,747 in ONEOK Inc on September 23, 2024 and sell it today you would earn a total of 4,238 from holding ONEOK Inc or generate 73.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
HSBC Holdings PLC vs. ONEOK Inc
Performance |
| Timeline |
| HSBC Holdings PLC |
| ONEOK Inc |
HSBC Holdings and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and ONEOK
The main advantage of trading using opposite HSBC Holdings and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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.| HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Hyundai Motor | HSBC Holdings vs. Toyota Motor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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