Correlation Between Cheniere Energy and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy 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 Cheniere Energy and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy and Kinder Morgan, you can compare the effects of market volatilities on Cheniere Energy 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 Cheniere Energy with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Kinder Morgan.
Diversification Opportunities for Cheniere Energy and Kinder Morgan
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cheniere and Kinder is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and Cheniere Energy 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 Cheniere Energy 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 Cheniere Energy i.e., Cheniere Energy and Kinder Morgan go up and down completely randomly.
Pair Corralation between Cheniere Energy and Kinder Morgan
Assuming the 90 days trading horizon Cheniere Energy is expected to generate 0.88 times more return on investment than Kinder Morgan. However, Cheniere Energy is 1.13 times less risky than Kinder Morgan. It trades about 0.37 of its potential returns per unit of risk. Kinder Morgan is currently generating about 0.3 per unit of risk. If you would invest 17,538 in Cheniere Energy on September 1, 2024 and sell it today you would earn a total of 3,362 from holding Cheniere Energy or generate 19.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cheniere Energy vs. Kinder Morgan
Performance |
| Timeline |
| Cheniere Energy |
| Kinder Morgan |
Cheniere Energy and Kinder Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Kinder Morgan
The main advantage of trading using opposite Cheniere Energy and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy 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.| Cheniere Energy vs. EAT WELL INVESTMENT | Cheniere Energy vs. WisdomTree Investments | Cheniere Energy vs. Playa Hotels Resorts | Cheniere Energy vs. Sunstone Hotel Investors |
| Kinder Morgan vs. Harmony Gold Mining | Kinder Morgan vs. Rogers Communications | Kinder Morgan vs. Ribbon Communications | Kinder Morgan vs. SK TELECOM TDADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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