Correlation Between ONEOK and WEG SA
Can any of the company-specific risk be diversified away by investing in both ONEOK and WEG SA 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 WEG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and WEG SA, you can compare the effects of market volatilities on ONEOK and WEG SA 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 WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and WEG SA.
Diversification Opportunities for ONEOK and WEG SA
Weak diversification
The 3 months correlation between ONEOK and WEG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA 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 WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of ONEOK i.e., ONEOK and WEG SA go up and down completely randomly.
Pair Corralation between ONEOK and WEG SA
Assuming the 90 days trading horizon ONEOK Inc is expected to generate 1.51 times more return on investment than WEG SA. However, ONEOK is 1.51 times more volatile than WEG SA. It trades about 0.09 of its potential returns per unit of risk. WEG SA is currently generating about 0.06 per unit of risk. If you would invest 16,750 in ONEOK Inc on August 26, 2024 and sell it today you would earn a total of 10,212 from holding ONEOK Inc or generate 60.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 62.47% |
| Values | Daily Returns |
ONEOK Inc vs. WEG SA
Performance |
| Timeline |
| ONEOK Inc |
| WEG SA |
ONEOK and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and WEG SA
The main advantage of trading using opposite ONEOK and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, WEG SA 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 WEG SA will offset losses from the drop in WEG SA's long position.| ONEOK vs. Kinder Morgan Kansas | ONEOK vs. BTG Pactual Logstica | ONEOK vs. Plano Plano Desenvolvimento | ONEOK vs. Cable One |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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