Correlation Between Cheniere Energy and Kinetik Holdings
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and Kinetik Holdings 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 Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Kinetik Holdings, you can compare the effects of market volatilities on Cheniere Energy and Kinetik Holdings 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 Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Kinetik Holdings.
Diversification Opportunities for Cheniere Energy and Kinetik Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheniere and Kinetik is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings 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 Partners are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Kinetik Holdings go up and down completely randomly.
Pair Corralation between Cheniere Energy and Kinetik Holdings
Considering the 90-day investment horizon Cheniere Energy is expected to generate 3.66 times less return on investment than Kinetik Holdings. But when comparing it to its historical volatility, Cheniere Energy Partners is 1.06 times less risky than Kinetik Holdings. It trades about 0.04 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,072 in Kinetik Holdings on August 29, 2024 and sell it today you would earn a total of 2,794 from holding Kinetik Holdings or generate 90.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Kinetik Holdings
Performance |
| Timeline |
| Cheniere Energy Partners |
| Kinetik Holdings |
Cheniere Energy and Kinetik Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Kinetik Holdings
The main advantage of trading using opposite Cheniere Energy and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, Kinetik Holdings 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 Kinetik Holdings will offset losses from the drop in Kinetik Holdings' long position.| Cheniere Energy vs. Antero Midstream Partners | Cheniere Energy vs. Excelerate Energy | Cheniere Energy vs. Energy Transfer LP | Cheniere Energy vs. Teekay |
| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. DT Midstream | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream Partners |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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