Correlation Between ONEOK and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both ONEOK and Imperial Petroleum 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 Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Imperial Petroleum Preferred, you can compare the effects of market volatilities on ONEOK and Imperial Petroleum 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 Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Imperial Petroleum.
Diversification Opportunities for ONEOK and Imperial Petroleum
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ONEOK and Imperial is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Imperial Petroleum Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum 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 Imperial Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Petroleum has no effect on the direction of ONEOK i.e., ONEOK and Imperial Petroleum go up and down completely randomly.
Pair Corralation between ONEOK and Imperial Petroleum
Considering the 90-day investment horizon ONEOK Inc is expected to generate 1.07 times more return on investment than Imperial Petroleum. However, ONEOK is 1.07 times more volatile than Imperial Petroleum Preferred. It trades about 0.11 of its potential returns per unit of risk. Imperial Petroleum Preferred is currently generating about 0.08 per unit of risk. If you would invest 5,718 in ONEOK Inc on August 27, 2024 and sell it today you would earn a total of 5,987 from holding ONEOK Inc or generate 104.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ONEOK Inc vs. Imperial Petroleum Preferred
Performance |
| Timeline |
| ONEOK Inc |
| Imperial Petroleum |
ONEOK and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Imperial Petroleum
The main advantage of trading using opposite ONEOK and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Imperial Petroleum 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 Imperial Petroleum will offset losses from the drop in Imperial Petroleum's long position.| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
| Imperial Petroleum vs. Imperial Petroleum | Imperial Petroleum vs. Dynagas LNG Partners | Imperial Petroleum vs. GasLog Partners LP | Imperial Petroleum vs. GasLog Partners LP |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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