Correlation Between ONEOK and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both ONEOK and Kinder Morgan 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 Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Kinder Morgan, you can compare the effects of market volatilities on ONEOK and Kinder Morgan 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 Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Kinder Morgan.
Diversification Opportunities for ONEOK and Kinder Morgan
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ONEOK and Kinder is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan 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 Kinder Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinder Morgan has no effect on the direction of ONEOK i.e., ONEOK and Kinder Morgan go up and down completely randomly.
Pair Corralation between ONEOK and Kinder Morgan
Considering the 90-day investment horizon ONEOK Inc is expected to under-perform the Kinder Morgan. But the stock apears to be less risky and, when comparing its historical volatility, ONEOK Inc is 1.58 times less risky than Kinder Morgan. The stock trades about -0.13 of its potential returns per unit of risk. The Kinder Morgan is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,811 in Kinder Morgan on November 3, 2024 and sell it today you would lose (63.00) from holding Kinder Morgan or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ONEOK Inc vs. Kinder Morgan
Performance |
| Timeline |
| ONEOK Inc |
| Kinder Morgan |
ONEOK and Kinder Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Kinder Morgan
The main advantage of trading using opposite ONEOK and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Kinder Morgan 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 Kinder Morgan will offset losses from the drop in Kinder Morgan's long position.| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
| Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. MPLX LP | Kinder Morgan vs. Enterprise Products Partners | Kinder Morgan vs. Energy Transfer 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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