Correlation Between Williams Companies and ONEOK
Can any of the company-specific risk be diversified away by investing in both Williams Companies 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 Williams Companies and ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Williams Companies and ONEOK Inc, you can compare the effects of market volatilities on Williams Companies 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 Williams Companies with a short position of ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Williams Companies and ONEOK.
Diversification Opportunities for Williams Companies and ONEOK
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Williams and ONEOK is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Williams Companies and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK Inc and Williams Companies 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 Williams Companies 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 Williams Companies i.e., Williams Companies and ONEOK go up and down completely randomly.
Pair Corralation between Williams Companies and ONEOK
Considering the 90-day investment horizon Williams Companies is expected to generate 1.5 times less return on investment than ONEOK. But when comparing it to its historical volatility, Williams Companies is 1.3 times less risky than ONEOK. It trades about 0.33 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 9,504 in ONEOK Inc on August 27, 2024 and sell it today you would earn a total of 1,648 from holding ONEOK Inc or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Williams Companies vs. ONEOK Inc
Performance |
| Timeline |
| Williams Companies |
| ONEOK Inc |
Williams Companies and ONEOK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Williams Companies and ONEOK
The main advantage of trading using opposite Williams Companies and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Companies 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.| Williams Companies vs. Enterprise Products Partners | Williams Companies vs. ONEOK Inc | Williams Companies vs. Energy Transfer LP | Williams Companies vs. Enbridge |
| ONEOK vs. Enterprise Products Partners | ONEOK vs. MPLX LP | ONEOK vs. Energy Transfer LP | ONEOK vs. Plains All American |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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