Correlation Between Kinder Morgan and Imperial Petroleum
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Imperial Petroleum 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 Imperial Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Imperial Petroleum, you can compare the effects of market volatilities on Kinder Morgan and Imperial Petroleum 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 Imperial Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Imperial Petroleum.
Diversification Opportunities for Kinder Morgan and Imperial Petroleum
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kinder and Imperial is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Imperial Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Petroleum 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 Imperial Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Petroleum has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Imperial Petroleum go up and down completely randomly.
Pair Corralation between Kinder Morgan and Imperial Petroleum
Considering the 90-day investment horizon Kinder Morgan is expected to generate 1.47 times less return on investment than Imperial Petroleum. But when comparing it to its historical volatility, Kinder Morgan is 4.75 times less risky than Imperial Petroleum. It trades about 0.11 of its potential returns per unit of risk. Imperial Petroleum is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 272.00 in Imperial Petroleum on August 27, 2024 and sell it today you would earn a total of 65.00 from holding Imperial Petroleum or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. Imperial Petroleum
Performance |
| Timeline |
| Kinder Morgan |
| Imperial Petroleum |
Kinder Morgan and Imperial Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Imperial Petroleum
The main advantage of trading using opposite Kinder Morgan and Imperial Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Imperial Petroleum 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 Imperial Petroleum will offset losses from the drop in Imperial Petroleum'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 |
| Imperial Petroleum vs. Western Midstream Partners | Imperial Petroleum vs. DT Midstream | Imperial Petroleum vs. MPLX LP | Imperial Petroleum vs. BP Prudhoe Bay |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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