Correlation Between ONEOK and Williams Companies
Can any of the company-specific risk be diversified away by investing in both ONEOK and Williams Companies 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 Williams Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ONEOK Inc and Williams Companies, you can compare the effects of market volatilities on ONEOK and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ONEOK and Williams Companies.
Diversification Opportunities for ONEOK and Williams Companies
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ONEOK and Williams is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of ONEOK i.e., ONEOK and Williams Companies go up and down completely randomly.
Pair Corralation between ONEOK and Williams Companies
Considering the 90-day investment horizon ONEOK Inc is expected to generate 1.18 times more return on investment than Williams Companies. However, ONEOK is 1.18 times more volatile than Williams Companies. It trades about 0.55 of its potential returns per unit of risk. Williams Companies is currently generating about 0.43 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. Williams Companies
Performance |
| Timeline |
| ONEOK Inc |
| Williams Companies |
ONEOK and Williams Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ONEOK and Williams Companies
The main advantage of trading using opposite ONEOK and Williams Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK position performs unexpectedly, Williams Companies 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 Williams Companies will offset losses from the drop in Williams Companies' long position.| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
| Williams Companies vs. Enterprise Products Partners | Williams Companies vs. ONEOK Inc | Williams Companies vs. Energy Transfer LP | Williams Companies vs. Enbridge |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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