Correlation Between Kinder Morgan and Magellan Midstream
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Magellan Midstream 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 Magellan Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Magellan Midstream Partners, you can compare the effects of market volatilities on Kinder Morgan and Magellan Midstream 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 Magellan Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Magellan Midstream.
Diversification Opportunities for Kinder Morgan and Magellan Midstream
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinder and Magellan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Magellan Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Midstream 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 Magellan Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Midstream has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Magellan Midstream go up and down completely randomly.
Pair Corralation between Kinder Morgan and Magellan Midstream
If you would invest 2,451 in Kinder Morgan on August 28, 2024 and sell it today you would earn a total of 334.00 from holding Kinder Morgan or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Kinder Morgan vs. Magellan Midstream Partners
Performance |
| Timeline |
| Kinder Morgan |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kinder Morgan and Magellan Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Magellan Midstream
The main advantage of trading using opposite Kinder Morgan and Magellan Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Magellan Midstream 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 Magellan Midstream will offset losses from the drop in Magellan Midstream'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 |
| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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