Correlation Between Smurfit Kappa and ONEOK

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

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

Diversification Opportunities for Smurfit Kappa and ONEOK

0.35

Correlation Coefficient

Smurfit Kappa  ONEOK

Weak diversification

The 3 months correlation between Smurfit and ONEOK is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Smurfit Kappa 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 Smurfit Kappa Group 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 Smurfit Kappa i.e., Smurfit Kappa and ONEOK go up and down completely randomly.

Pair Corralation between Smurfit Kappa and ONEOK

Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.06 times more return on investment than ONEOK. However, Smurfit Kappa is 1.06 times more volatile than ONEOK Inc. It trades about -0.09 of its potential returns per unit of risk. ONEOK Inc is currently generating about -0.12 per unit of risk. If you would invest  5,117  in Smurfit Kappa Group on December 7, 2024 and sell it today you would lose (617.00) from holding Smurfit Kappa Group or give up 12.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Smurfit Kappa Group  vs.  ONEOK Inc

Smurfit Kappa Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit Kappa Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ONEOK Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ONEOK Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Smurfit Kappa and ONEOK

The main advantage of trading using opposite Smurfit Kappa and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa 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 Smurfit Kappa Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.