Correlation Between Crestwood Equity and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both Crestwood Equity 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 Crestwood Equity and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crestwood Equity Partners and Kinder Morgan, you can compare the effects of market volatilities on Crestwood Equity 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 Crestwood Equity with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crestwood Equity and Kinder Morgan.
Diversification Opportunities for Crestwood Equity and Kinder Morgan
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crestwood and Kinder is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Crestwood Equity Partners and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and Crestwood Equity 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 Crestwood Equity Partners 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 Crestwood Equity i.e., Crestwood Equity and Kinder Morgan go up and down completely randomly.
Pair Corralation between Crestwood Equity and Kinder Morgan
Given the investment horizon of 90 days Crestwood Equity is expected to generate 1.94 times less return on investment than Kinder Morgan. In addition to that, Crestwood Equity is 1.55 times more volatile than Kinder Morgan. It trades about 0.04 of its total potential returns per unit of risk. Kinder Morgan is currently generating about 0.11 per unit of volatility. If you would invest 1,603 in Kinder Morgan on August 27, 2024 and sell it today you would earn a total of 1,246 from holding Kinder Morgan or generate 77.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 31.85% |
| Values | Daily Returns |
Crestwood Equity Partners vs. Kinder Morgan
Performance |
| Timeline |
| Crestwood Equity Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kinder Morgan |
Crestwood Equity and Kinder Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crestwood Equity and Kinder Morgan
The main advantage of trading using opposite Crestwood Equity and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crestwood Equity 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.| Crestwood Equity vs. Western Midstream Partners | Crestwood Equity vs. DT Midstream | Crestwood Equity vs. MPLX LP | Crestwood Equity vs. Enterprise Products Partners |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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