Correlation Between ONEOK and Energy Transfer
Can any of the company-specific risk be diversified away by investing in both ONEOK and Energy Transfer 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 Energy Transfer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Energy Transfer LP, you can compare the effects of market volatilities on ONEOK and Energy Transfer 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 Energy Transfer. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Energy Transfer.
Diversification Opportunities for ONEOK and Energy Transfer
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ONEOK and Energy is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Energy Transfer LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Transfer LP 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 Energy Transfer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Transfer LP has no effect on the direction of ONEOK i.e., ONEOK and Energy Transfer go up and down completely randomly.
Pair Corralation between ONEOK and Energy Transfer
Considering the 90-day investment horizon ONEOK Inc is expected to generate 1.33 times more return on investment than Energy Transfer. However, ONEOK is 1.33 times more volatile than Energy Transfer LP. It trades about 0.55 of its potential returns per unit of risk. Energy Transfer LP is currently generating about 0.6 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. Energy Transfer LP
Performance |
| Timeline |
| ONEOK Inc |
| Energy Transfer LP |
ONEOK and Energy Transfer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Energy Transfer
The main advantage of trading using opposite ONEOK and Energy Transfer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Energy Transfer 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 Energy Transfer will offset losses from the drop in Energy Transfer's long position.| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
| Energy Transfer vs. Kinder Morgan | Energy Transfer vs. MPLX LP | Energy Transfer vs. Enbridge | Energy Transfer vs. Enterprise Products Partners |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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