Correlation Between Kinder Morgan and Williams Companies
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and Williams Companies 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 Williams Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and Williams Companies, you can compare the effects of market volatilities on Kinder Morgan and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and Williams Companies.
Diversification Opportunities for Kinder Morgan and Williams Companies
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinder and Williams is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Williams Companies go up and down completely randomly.
Pair Corralation between Kinder Morgan and Williams Companies
Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.97 times more return on investment than Williams Companies. However, Kinder Morgan is 1.03 times less risky than Williams Companies. It trades about 0.17 of its potential returns per unit of risk. Williams Companies is currently generating about 0.16 per unit of risk. If you would invest 1,599 in Kinder Morgan on November 3, 2024 and sell it today you would earn a total of 1,149 from holding Kinder Morgan or generate 71.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinder Morgan vs. Williams Companies
Performance |
| Timeline |
| Kinder Morgan |
| Williams Companies |
Kinder Morgan and Williams Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinder Morgan and Williams Companies
The main advantage of trading using opposite Kinder Morgan and Williams Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, Williams Companies 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 Williams Companies will offset losses from the drop in Williams Companies' long position.| Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. MPLX LP | Kinder Morgan vs. Enterprise Products Partners | Kinder Morgan vs. Energy Transfer LP |
| Williams Companies vs. Enterprise Products Partners | Williams Companies vs. ONEOK Inc | Williams Companies vs. Energy Transfer LP | Williams Companies vs. Enbridge |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |