Correlation Between NEW MILLENNIUM and ONEOK

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

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

Diversification Opportunities for NEW MILLENNIUM and ONEOK

0.63

Correlation Coefficient

NEW MILLENNIUM  ONEOK

Poor diversification

The 3 months correlation between NEW and ONEOK is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and ONEOK go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and ONEOK

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to under-perform the ONEOK. In addition to that, NEW MILLENNIUM is 1.46 times more volatile than ONEOK Inc. It trades about 0.0 of its total potential returns per unit of risk. ONEOK Inc is currently generating about 0.13 per unit of volatility. If you would invest  8,467  in ONEOK Inc on October 4, 2024 and sell it today you would earn a total of  1,130  from holding ONEOK Inc or generate 13.35% return on investment over 90 days.

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

NEW MILLENNIUM IRON  vs.  ONEOK Inc

NEW MILLENNIUM IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW MILLENNIUM IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, NEW MILLENNIUM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ONEOK Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ONEOK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEW MILLENNIUM and ONEOK

The main advantage of trading using opposite NEW MILLENNIUM and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.