Correlation Between Travelers Companies and ONEOK

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

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

Diversification Opportunities for Travelers Companies and ONEOK

-0.43

Correlation Coefficient

Travelers Companies  ONEOK

Very good diversification

The 3 months correlation between Travelers and ONEOK is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and ONEOK PARTNERS L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK PARTNERS L and Travelers Companies 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 The Travelers Companies 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 PARTNERS L has no effect on the direction of Travelers Companies i.e., Travelers Companies and ONEOK go up and down completely randomly.

Pair Corralation between Travelers Companies and ONEOK

Considering the 90-day investment horizon The Travelers Companies is expected to generate 0.98 times more return on investment than ONEOK. However, The Travelers Companies is 1.02 times less risky than ONEOK. It trades about 0.12 of its potential returns per unit of risk. ONEOK PARTNERS L is currently generating about -0.07 per unit of risk. If you would invest  23,084  in The Travelers Companies on September 5, 2024 and sell it today you would earn a total of  3,094  from holding The Travelers Companies or generate 13.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.88%
Values	Daily Returns

The Travelers Companies  vs.  ONEOK PARTNERS L

The Travelers Companies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Travelers Companies showed solid returns over the last few months and may actually be approaching a breakup point.

ONEOK PARTNERS L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ONEOK PARTNERS L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ONEOK PARTNERS L investors.

Pair Trading with Travelers Companies and ONEOK

The main advantage of trading using opposite Travelers Companies and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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 The Travelers Companies and ONEOK PARTNERS L 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.