Correlation Between Dynagas LNG and Kinetik Holdings
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG 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 Dynagas LNG and Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and Kinetik Holdings, you can compare the effects of market volatilities on Dynagas LNG 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 Dynagas LNG with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and Kinetik Holdings.
Diversification Opportunities for Dynagas LNG and Kinetik Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dynagas and Kinetik is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Dynagas LNG 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 Dynagas LNG 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 Dynagas LNG i.e., Dynagas LNG and Kinetik Holdings go up and down completely randomly.
Pair Corralation between Dynagas LNG and Kinetik Holdings
Assuming the 90 days trading horizon Dynagas LNG is expected to generate 11.85 times less return on investment than Kinetik Holdings. But when comparing it to its historical volatility, Dynagas LNG Partners is 4.13 times less risky than Kinetik Holdings. It trades about 0.12 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,420 in Kinetik Holdings on August 28, 2024 and sell it today you would earn a total of 1,498 from holding Kinetik Holdings or generate 33.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynagas LNG Partners vs. Kinetik Holdings
Performance |
| Timeline |
| Dynagas LNG Partners |
| Kinetik Holdings |
Dynagas LNG and Kinetik Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and Kinetik Holdings
The main advantage of trading using opposite Dynagas LNG and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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.| Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Seapeak LLC |
| 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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