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
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Williams and ONEOK is 0.89. 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 1.14 times more return on investment than ONEOK. However, Williams Companies is 1.14 times more volatile than ONEOK Inc. It trades about 0.26 of its potential returns per unit of risk. ONEOK Inc is currently generating about 0.05 per unit of risk. If you would invest 3,911 in Williams Companies on March 8, 2024 and sell it today you would earn a total of 247.00 from holding Williams Companies or generate 6.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | 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. Plains GP Holdings | Williams Companies vs. Plains All American | Williams Companies vs. Hess Midstream Partners | Williams Companies vs. MPLX LP |
ONEOK vs. Plains GP Holdings | ONEOK vs. Plains All American | ONEOK vs. Hess Midstream Partners | ONEOK vs. MPLX 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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