Correlation Between Rio Tinto and ONEOK
Can any of the company-specific risk be diversified away by investing in both Rio Tinto 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 Rio Tinto and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto PLC and ONEOK Inc, you can compare the effects of market volatilities on Rio Tinto 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 Rio Tinto with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and ONEOK.
Diversification Opportunities for Rio Tinto and ONEOK
Very good diversification
The 3 months correlation between Rio and ONEOK is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto PLC and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Rio Tinto 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 Rio Tinto 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 Rio Tinto i.e., Rio Tinto and ONEOK go up and down completely randomly.
Pair Corralation between Rio Tinto and ONEOK
Assuming the 90 days trading horizon Rio Tinto PLC is expected to under-perform the ONEOK. But the stock apears to be less risky and, when comparing its historical volatility, Rio Tinto PLC is 1.26 times less risky than ONEOK. The stock trades about -0.42 of its potential returns per unit of risk. The ONEOK Inc is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 10,596 in ONEOK Inc on October 11, 2024 and sell it today you would lose (384.00) from holding ONEOK Inc or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Rio Tinto PLC vs. ONEOK Inc
Performance |
| Timeline |
| Rio Tinto PLC |
| ONEOK Inc |
Rio Tinto and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and ONEOK
The main advantage of trading using opposite Rio Tinto and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto 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.| Rio Tinto vs. Edinburgh Investment Trust | Rio Tinto vs. SBM Offshore NV | Rio Tinto vs. Mobius Investment Trust | Rio Tinto vs. Livermore Investments Group |
| ONEOK vs. Roadside Real Estate | ONEOK vs. Gamma Communications PLC | ONEOK vs. Batm Advanced Communications | ONEOK vs. Martin Marietta Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |