Correlation Between Kinder Morgan and Dynagas LNG
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Dynagas LNG 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 Kinder Morgan and Dynagas LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Dynagas LNG Partners, you can compare the effects of market volatilities on Kinder Morgan and Dynagas LNG 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 Kinder Morgan with a short position of Dynagas LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Dynagas LNG.
Diversification Opportunities for Kinder Morgan and Dynagas LNG
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinder and Dynagas is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Dynagas LNG Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynagas LNG Partners and Kinder Morgan 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 Kinder Morgan are associated (or correlated) with Dynagas LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynagas LNG Partners has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Dynagas LNG go up and down completely randomly.
Pair Corralation between Kinder Morgan and Dynagas LNG
Considering the 90-day investment horizon Kinder Morgan is expected to generate 2.54 times more return on investment than Dynagas LNG. However, Kinder Morgan is 2.54 times more volatile than Dynagas LNG Partners. It trades about 0.25 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about 0.09 per unit of risk. If you would invest 1,670 in Kinder Morgan on August 27, 2024 and sell it today you would earn a total of 1,179 from holding Kinder Morgan or generate 70.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. Dynagas LNG Partners
Performance |
| Timeline |
| Kinder Morgan |
| Dynagas LNG Partners |
Kinder Morgan and Dynagas LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Dynagas LNG
The main advantage of trading using opposite Kinder Morgan and Dynagas LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Dynagas LNG 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 Dynagas LNG will offset losses from the drop in Dynagas LNG's long position.| Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. MPLX LP | Kinder Morgan vs. Enterprise Products Partners | Kinder Morgan vs. Energy Transfer LP |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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