Correlation Between Kinder Morgan and TOP Ships
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and TOP Ships 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 TOP Ships into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and TOP Ships, you can compare the effects of market volatilities on Kinder Morgan and TOP Ships 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 TOP Ships. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and TOP Ships.
Diversification Opportunities for Kinder Morgan and TOP Ships
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kinder and TOP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and TOP Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOP Ships 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 TOP Ships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOP Ships has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and TOP Ships go up and down completely randomly.
Pair Corralation between Kinder Morgan and TOP Ships
Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.73 times more return on investment than TOP Ships. However, Kinder Morgan is 1.38 times less risky than TOP Ships. It trades about 0.34 of its potential returns per unit of risk. TOP Ships is currently generating about -0.16 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. TOP Ships
Performance |
| Timeline |
| Kinder Morgan |
| TOP Ships |
Kinder Morgan and TOP Ships Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and TOP Ships
The main advantage of trading using opposite Kinder Morgan and TOP Ships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, TOP Ships 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 TOP Ships will offset losses from the drop in TOP Ships' long position.| Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. MPLX LP | Kinder Morgan vs. Enterprise Products Partners | Kinder Morgan vs. Energy Transfer LP |
| TOP Ships vs. United Maritime | TOP Ships vs. Globus Maritime | TOP Ships vs. Castor Maritime | TOP Ships vs. Safe Bulkers |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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