Correlation Between ONEOK and Enterprise Products
Can any of the company-specific risk be diversified away by investing in both ONEOK and Enterprise Products 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 Enterprise Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Enterprise Products Partners, you can compare the effects of market volatilities on ONEOK and Enterprise Products 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 Enterprise Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Enterprise Products.
Diversification Opportunities for ONEOK and Enterprise Products
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ONEOK and Enterprise is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Enterprise Products Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Products 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 Enterprise Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Products has no effect on the direction of ONEOK i.e., ONEOK and Enterprise Products go up and down completely randomly.
Pair Corralation between ONEOK and Enterprise Products
Considering the 90-day investment horizon ONEOK Inc is expected to generate 2.42 times more return on investment than Enterprise Products. However, ONEOK is 2.42 times more volatile than Enterprise Products Partners. It trades about 0.56 of its potential returns per unit of risk. Enterprise Products Partners is currently generating about 0.87 per unit of risk. If you would invest 9,577 in ONEOK Inc on August 24, 2024 and sell it today you would earn a total of 2,098 from holding ONEOK Inc or generate 21.91% 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. Enterprise Products Partners
Performance |
| Timeline |
| ONEOK Inc |
| Enterprise Products |
ONEOK and Enterprise Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Enterprise Products
The main advantage of trading using opposite ONEOK and Enterprise Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Enterprise Products 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 Enterprise Products will offset losses from the drop in Enterprise Products' long position.| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
| Enterprise Products vs. Western Midstream Partners | Enterprise Products vs. MPLX LP | Enterprise Products vs. Hess Midstream Partners | Enterprise Products vs. Plains All American |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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