Correlation Between Kodiak Gas and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Kodiak Gas and Natural Gas 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 Kodiak Gas and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kodiak Gas Services, and Natural Gas Services, you can compare the effects of market volatilities on Kodiak Gas and Natural Gas 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 Kodiak Gas with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Gas and Natural Gas.
Diversification Opportunities for Kodiak Gas and Natural Gas
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kodiak and Natural is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services and Kodiak Gas 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 Kodiak Gas Services, are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of Kodiak Gas i.e., Kodiak Gas and Natural Gas go up and down completely randomly.
Pair Corralation between Kodiak Gas and Natural Gas
Considering the 90-day investment horizon Kodiak Gas is expected to generate 1.11 times less return on investment than Natural Gas. But when comparing it to its historical volatility, Kodiak Gas Services, is 1.52 times less risky than Natural Gas. It trades about 0.62 of its potential returns per unit of risk. Natural Gas Services is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,964 in Natural Gas Services on August 24, 2024 and sell it today you would earn a total of 759.00 from holding Natural Gas Services or generate 38.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kodiak Gas Services, vs. Natural Gas Services
Performance |
| Timeline |
| Kodiak Gas Services, |
| Natural Gas Services |
Kodiak Gas and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kodiak Gas and Natural Gas
The main advantage of trading using opposite Kodiak Gas and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Gas position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| Kodiak Gas vs. Wingstop | Kodiak Gas vs. Playa Hotels Resorts | Kodiak Gas vs. Park Hotels Resorts | Kodiak Gas vs. CECO Environmental Corp |
| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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