Correlation Between Kinder Morgan and Plains All
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Plains All 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 Plains All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Plains All American, you can compare the effects of market volatilities on Kinder Morgan and Plains All 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 Plains All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Plains All.
Diversification Opportunities for Kinder Morgan and Plains All
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kinder and Plains is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Plains All go up and down completely randomly.
Pair Corralation between Kinder Morgan and Plains All
Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.91 times more return on investment than Plains All. However, Kinder Morgan is 1.1 times less risky than Plains All. It trades about 0.25 of its potential returns per unit of risk. Plains All American is currently generating about 0.07 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. Plains All American
Performance |
| Timeline |
| Kinder Morgan |
| Plains All American |
Kinder Morgan and Plains All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Plains All
The main advantage of trading using opposite Kinder Morgan and Plains All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Plains All 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 Plains All will offset losses from the drop in Plains All'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 |
| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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