Correlation Between Roper Technologies and ONEOK

Can any of the company-specific risk be diversified away by investing in both Roper Technologies 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 Roper Technologies and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roper Technologies and ONEOK Inc, you can compare the effects of market volatilities on Roper Technologies 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 Roper Technologies with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies and ONEOK.

Diversification Opportunities for Roper Technologies and ONEOK

0.41

Correlation Coefficient

Roper Technologies  ONEOK

Very weak diversification

The 3 months correlation between Roper and ONEOK is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Roper Technologies 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 Roper Technologies 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 Roper Technologies i.e., Roper Technologies and ONEOK go up and down completely randomly.

Pair Corralation between Roper Technologies and ONEOK

Assuming the 90 days trading horizon Roper Technologies is expected to under-perform the ONEOK. But the stock apears to be less risky and, when comparing its historical volatility, Roper Technologies is 1.63 times less risky than ONEOK. The stock trades about -0.09 of its potential returns per unit of risk. The ONEOK Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,826  in ONEOK Inc on October 6, 2024 and sell it today you would earn a total of  477.00  from holding ONEOK Inc or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Roper Technologies  vs.  ONEOK Inc

Roper Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Roper Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ONEOK Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ONEOK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Roper Technologies and ONEOK

The main advantage of trading using opposite Roper Technologies and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies 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.

The idea behind Roper Technologies and ONEOK Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.