Correlation Between Herald Investment and ONEOK

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

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

Diversification Opportunities for Herald Investment and ONEOK

0.33

Correlation Coefficient

Herald Investment  ONEOK

Weak diversification

The 3 months correlation between Herald and ONEOK is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Herald 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 Herald 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 Herald 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 Herald Investment i.e., Herald Investment and ONEOK go up and down completely randomly.

Pair Corralation between Herald Investment and ONEOK

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.61 times more return on investment than ONEOK. However, Herald Investment Trust is 1.64 times less risky than ONEOK. It trades about 0.34 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.01 per unit of risk. If you would invest  211,500  in Herald Investment Trust on October 7, 2024 and sell it today you would earn a total of  35,000  from holding Herald Investment Trust or generate 16.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Herald Investment Trust  vs.  ONEOK Inc

Herald Investment Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Herald Investment and ONEOK

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

The idea behind Herald Investment Trust 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.