Correlation Between ONEOK and Yum Brands
Can any of the company-specific risk be diversified away by investing in both ONEOK and Yum Brands 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 ONEOK and Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Yum Brands, you can compare the effects of market volatilities on ONEOK and Yum Brands 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 ONEOK with a short position of Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Yum Brands.
Diversification Opportunities for ONEOK and Yum Brands
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ONEOK and Yum is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands and ONEOK 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 ONEOK Inc are associated (or correlated) with Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of ONEOK i.e., ONEOK and Yum Brands go up and down completely randomly.
Pair Corralation between ONEOK and Yum Brands
Assuming the 90 days trading horizon ONEOK Inc is expected to generate 0.36 times more return on investment than Yum Brands. However, ONEOK Inc is 2.75 times less risky than Yum Brands. It trades about 0.08 of its potential returns per unit of risk. Yum Brands is currently generating about 0.02 per unit of risk. If you would invest 5,747 in ONEOK Inc on September 23, 2024 and sell it today you would earn a total of 4,238 from holding ONEOK Inc or generate 73.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
ONEOK Inc vs. Yum Brands
Performance |
| Timeline |
| ONEOK Inc |
| Yum Brands |
ONEOK and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Yum Brands
The main advantage of trading using opposite ONEOK and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| ONEOK vs. Fevertree Drinks Plc | ONEOK vs. Foresight Environmental Infrastructure | ONEOK vs. Fortune Brands Home | ONEOK vs. Silver Bullet Data |
| Yum Brands vs. Uniper SE | Yum Brands vs. Mulberry Group PLC | Yum Brands vs. London Security Plc | Yum Brands vs. Triad Group PLC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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