Correlation Between Smithson Investment and ONEOK
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and ONEOK Inc, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and ONEOK.
Diversification Opportunities for Smithson Investment and ONEOK
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Smithson and ONEOK is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and ONEOK go up and down completely randomly.
Pair Corralation between Smithson Investment and ONEOK
Assuming the 90 days trading horizon Smithson Investment is expected to generate 4.7 times less return on investment than ONEOK. But when comparing it to its historical volatility, Smithson Investment Trust is 1.28 times less risky than ONEOK. It trades about 0.02 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,212 in ONEOK Inc on November 6, 2024 and sell it today you would earn a total of 3,537 from holding ONEOK Inc or generate 56.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Smithson Investment Trust vs. ONEOK Inc
Performance |
| Timeline |
| Smithson Investment Trust |
| ONEOK Inc |
Smithson Investment and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and ONEOK
The main advantage of trading using opposite Smithson Investment and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. MediaZest plc | Smithson Investment vs. LBG Media PLC | Smithson Investment vs. Applied Materials | Smithson Investment vs. Intermediate Capital Group |
| ONEOK vs. CVS Health Corp | ONEOK vs. Planet Fitness Cl | ONEOK vs. Omega Healthcare Investors | ONEOK vs. Impax Asset Management |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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