Correlation Between Kinder Morgan and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Western 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 Western 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 Western Midstream Partners, you can compare the effects of market volatilities on Kinder Morgan and Western 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Western Midstream.
Diversification Opportunities for Kinder Morgan and Western Midstream
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kinder and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Western Midstream go up and down completely randomly.
Pair Corralation between Kinder Morgan and Western Midstream
Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.73 times more return on investment than Western Midstream. However, Kinder Morgan is 1.36 times less risky than Western Midstream. It trades about 0.11 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.08 per unit of risk. If you would invest 1,633 in Kinder Morgan on August 27, 2024 and sell it today you would earn a total of 1,216 from holding Kinder Morgan or generate 74.46% 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. Western Midstream Partners
Performance |
| Timeline |
| Kinder Morgan |
| Western Midstream |
Kinder Morgan and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Western Midstream
The main advantage of trading using opposite Kinder Morgan and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Western 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 Western Midstream will offset losses from the drop in Western 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 |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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