Correlation Between Kinetik Holdings and Drilling Tools
Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings and Drilling Tools 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 Kinetik Holdings and Drilling Tools into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetik Holdings and Drilling Tools International, you can compare the effects of market volatilities on Kinetik Holdings and Drilling Tools 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 Kinetik Holdings with a short position of Drilling Tools. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Drilling Tools.
Diversification Opportunities for Kinetik Holdings and Drilling Tools
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kinetik and Drilling is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Drilling Tools International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drilling Tools Inter and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with Drilling Tools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drilling Tools Inter has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Drilling Tools go up and down completely randomly.
Pair Corralation between Kinetik Holdings and Drilling Tools
Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.62 times more return on investment than Drilling Tools. However, Kinetik Holdings is 1.62 times less risky than Drilling Tools. It trades about 0.27 of its potential returns per unit of risk. Drilling Tools International is currently generating about -0.02 per unit of risk. If you would invest 4,690 in Kinetik Holdings on September 3, 2024 and sell it today you would earn a total of 1,212 from holding Kinetik Holdings or generate 25.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetik Holdings vs. Drilling Tools International
Performance |
| Timeline |
| Kinetik Holdings |
| Drilling Tools Inter |
Kinetik Holdings and Drilling Tools Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetik Holdings and Drilling Tools
The main advantage of trading using opposite Kinetik Holdings and Drilling Tools positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings position performs unexpectedly, Drilling Tools 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 Drilling Tools will offset losses from the drop in Drilling Tools' long position.| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. DT Midstream | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream Partners |
| Drilling Tools vs. Verde Clean Fuels | Drilling Tools vs. Semtech | Drilling Tools vs. NextNav Warrant | Drilling Tools vs. Nasdaq Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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