Correlation Between Adriatic Metals and ONEOK

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

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

Diversification Opportunities for Adriatic Metals and ONEOK

0.26

Correlation Coefficient

Adriatic Metals  ONEOK

Modest diversification

The 3 months correlation between Adriatic and ONEOK is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Adriatic Metals and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Adriatic Metals 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 Adriatic Metals 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 Adriatic Metals i.e., Adriatic Metals and ONEOK go up and down completely randomly.

Pair Corralation between Adriatic Metals and ONEOK

Assuming the 90 days trading horizon Adriatic Metals is expected to under-perform the ONEOK. In addition to that, Adriatic Metals is 1.54 times more volatile than ONEOK Inc. It trades about -0.17 of its total potential returns per unit of risk. ONEOK Inc is currently generating about -0.09 per unit of volatility. If you would invest  10,516  in ONEOK Inc on October 8, 2024 and sell it today you would lose (213.00) from holding ONEOK Inc or give up 2.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Adriatic Metals  vs.  ONEOK Inc

Adriatic Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adriatic Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Adriatic Metals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ONEOK Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ONEOK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Adriatic Metals and ONEOK

The main advantage of trading using opposite Adriatic Metals and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adriatic Metals 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 Adriatic Metals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.