Correlation Between Kinder Morgan and Genesis Energy
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Genesis Energy 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 Genesis Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Genesis Energy LP, you can compare the effects of market volatilities on Kinder Morgan and Genesis Energy 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 Genesis Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Genesis Energy.
Diversification Opportunities for Kinder Morgan and Genesis Energy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kinder and Genesis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP 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 Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Genesis Energy go up and down completely randomly.
Pair Corralation between Kinder Morgan and Genesis Energy
Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.51 times more return on investment than Genesis Energy. However, Kinder Morgan is 1.96 times less risky than Genesis Energy. It trades about 0.43 of its potential returns per unit of risk. Genesis Energy LP is currently generating about -0.09 per unit of risk. If you would invest 2,451 in Kinder Morgan on August 27, 2024 and sell it today you would earn a total of 398.00 from holding Kinder Morgan or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. Genesis Energy LP
Performance |
| Timeline |
| Kinder Morgan |
| Genesis Energy LP |
Kinder Morgan and Genesis Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Genesis Energy
The main advantage of trading using opposite Kinder Morgan and Genesis Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Genesis Energy 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 Genesis Energy will offset losses from the drop in Genesis Energy'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 |
| Genesis Energy vs. Brooge Holdings | Genesis Energy vs. Plains All American | Genesis Energy vs. Western Midstream Partners | Genesis Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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