Correlation Between CAP LEASE and ONEOK

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

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

Diversification Opportunities for CAP LEASE and ONEOK

-0.7

Correlation Coefficient

CAP LEASE  ONEOK

Excellent diversification

The 3 months correlation between CAP and ONEOK is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and ONEOK go up and down completely randomly.

Pair Corralation between CAP LEASE and ONEOK

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to generate 0.75 times more return on investment than ONEOK. However, CAP LEASE AVIATION is 1.33 times less risky than ONEOK. It trades about 0.23 of its potential returns per unit of risk. ONEOK Inc is currently generating about -0.35 per unit of risk. If you would invest  48.00  in CAP LEASE AVIATION on October 1, 2024 and sell it today you would earn a total of  2.00  from holding CAP LEASE AVIATION or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

CAP LEASE AVIATION  vs.  ONEOK Inc

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ONEOK Inc

Risk-Adjusted Performance

7 of 100

OK

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 uncertain basic indicators, ONEOK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CAP LEASE and ONEOK

The main advantage of trading using opposite CAP LEASE and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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 CAP LEASE AVIATION 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.