Correlation Between Kodiak Gas and USA Compression
Can any of the company-specific risk be diversified away by investing in both Kodiak Gas and USA Compression 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 USA Compression 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 USA Compression Partners, you can compare the effects of market volatilities on Kodiak Gas and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Gas and USA Compression.
Diversification Opportunities for Kodiak Gas and USA Compression
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kodiak and USA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Kodiak Gas i.e., Kodiak Gas and USA Compression go up and down completely randomly.
Pair Corralation between Kodiak Gas and USA Compression
Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 1.7 times more return on investment than USA Compression. However, Kodiak Gas is 1.7 times more volatile than USA Compression Partners. It trades about 0.36 of its potential returns per unit of risk. USA Compression Partners is currently generating about 0.13 per unit of risk. If you would invest 2,863 in Kodiak Gas Services, on August 30, 2024 and sell it today you would earn a total of 1,119 from holding Kodiak Gas Services, or generate 39.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kodiak Gas Services, vs. USA Compression Partners
Performance |
| Timeline |
| Kodiak Gas Services, |
| USA Compression Partners |
Kodiak Gas and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kodiak Gas and USA Compression
The main advantage of trading using opposite Kodiak Gas and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Gas position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| Kodiak Gas vs. Nuvalent | Kodiak Gas vs. Ross Stores | Kodiak Gas vs. Digi International | Kodiak Gas vs. Amkor Technology |
| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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