Correlation Between ONEOK and DT Midstream
Can any of the company-specific risk be diversified away by investing in both ONEOK and DT Midstream 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 DT Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and DT Midstream, you can compare the effects of market volatilities on ONEOK and DT Midstream 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 DT Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and DT Midstream.
Diversification Opportunities for ONEOK and DT Midstream
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ONEOK and DTM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and DT Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DT Midstream 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 DT Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DT Midstream has no effect on the direction of ONEOK i.e., ONEOK and DT Midstream go up and down completely randomly.
Pair Corralation between ONEOK and DT Midstream
Considering the 90-day investment horizon ONEOK Inc is expected to under-perform the DT Midstream. But the stock apears to be less risky and, when comparing its historical volatility, ONEOK Inc is 1.15 times less risky than DT Midstream. The stock trades about -0.08 of its potential returns per unit of risk. The DT Midstream is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,951 in DT Midstream on September 15, 2024 and sell it today you would earn a total of 111.00 from holding DT Midstream or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ONEOK Inc vs. DT Midstream
Performance |
| Timeline |
| ONEOK Inc |
| DT Midstream |
ONEOK and DT Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and DT Midstream
The main advantage of trading using opposite ONEOK and DT Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, DT Midstream 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 DT Midstream will offset losses from the drop in DT Midstream's long position.| ONEOK vs. DT Midstream | ONEOK vs. MPLX LP | ONEOK vs. Plains All American | ONEOK vs. Hess Midstream Partners |
| DT Midstream vs. Western Midstream Partners | DT Midstream vs. MPLX LP | DT Midstream vs. Hess Midstream Partners | DT Midstream vs. Brooge Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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