Correlation Between Pembina Pipeline and ONEOK
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline and ONEOK 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 Pembina Pipeline and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and ONEOK Inc, you can compare the effects of market volatilities on Pembina Pipeline and ONEOK 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 Pembina Pipeline with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and ONEOK.
Diversification Opportunities for Pembina Pipeline and ONEOK
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pembina and ONEOK is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Pembina Pipeline 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 Pembina Pipeline Corp are associated (or correlated) with ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Pembina Pipeline i.e., Pembina Pipeline and ONEOK go up and down completely randomly.
Pair Corralation between Pembina Pipeline and ONEOK
Assuming the 90 days horizon Pembina Pipeline is expected to generate 1.82 times less return on investment than ONEOK. But when comparing it to its historical volatility, Pembina Pipeline Corp is 1.15 times less risky than ONEOK. It trades about 0.06 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,435 in ONEOK Inc on August 30, 2024 and sell it today you would earn a total of 5,343 from holding ONEOK Inc or generate 98.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. ONEOK Inc
Performance |
| Timeline |
| Pembina Pipeline Corp |
| ONEOK Inc |
Pembina Pipeline and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and ONEOK
The main advantage of trading using opposite Pembina Pipeline and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline position performs unexpectedly, ONEOK 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 ONEOK will offset losses from the drop in ONEOK's long position.| Pembina Pipeline vs. Enbridge | Pembina Pipeline vs. Kinder Morgan | Pembina Pipeline vs. Targa Resources Corp |
| ONEOK vs. BORR DRILLING NEW | ONEOK vs. Apollo Investment Corp | ONEOK vs. New Residential Investment | ONEOK vs. Meiko Electronics Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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