Correlation Between Unilever PLC and ONEOK
Can any of the company-specific risk be diversified away by investing in both Unilever PLC 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 Unilever PLC and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and ONEOK Inc, you can compare the effects of market volatilities on Unilever PLC 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 Unilever PLC with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and ONEOK.
Diversification Opportunities for Unilever PLC and ONEOK
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Unilever and ONEOK is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Unilever PLC 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 Unilever PLC 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 Unilever PLC i.e., Unilever PLC and ONEOK go up and down completely randomly.
Pair Corralation between Unilever PLC and ONEOK
Assuming the 90 days trading horizon Unilever PLC is expected to generate 1.93 times less return on investment than ONEOK. But when comparing it to its historical volatility, Unilever PLC is 1.55 times less risky than ONEOK. It trades about 0.09 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,791 in ONEOK Inc on September 25, 2024 and sell it today you would earn a total of 3,267 from holding ONEOK Inc or generate 48.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Unilever PLC vs. ONEOK Inc
Performance |
Timeline |
Unilever PLC |
ONEOK Inc |
Unilever PLC and ONEOK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Unilever PLC and ONEOK
The main advantage of trading using opposite Unilever PLC and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever PLC 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.Unilever PLC vs. Toyota Motor Corp | Unilever PLC vs. SoftBank Group Corp | Unilever PLC vs. OTP Bank Nyrt | Unilever PLC vs. Newmont Corp |
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Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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