Correlation Between Kinetik Holdings and NGL Energy
Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings and NGL Energy 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 NGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetik Holdings and NGL Energy Partners, you can compare the effects of market volatilities on Kinetik Holdings and NGL Energy 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 NGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and NGL Energy.
Diversification Opportunities for Kinetik Holdings and NGL Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetik and NGL is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and NGL Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGL Energy Partners 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 NGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGL Energy Partners has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and NGL Energy go up and down completely randomly.
Pair Corralation between Kinetik Holdings and NGL Energy
Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.68 times more return on investment than NGL Energy. However, Kinetik Holdings is 1.68 times more volatile than NGL Energy Partners. It trades about 0.12 of its potential returns per unit of risk. NGL Energy Partners is currently generating about 0.11 per unit of risk. If you would invest 2,978 in Kinetik Holdings on August 31, 2024 and sell it today you would earn a total of 2,924 from holding Kinetik Holdings or generate 98.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetik Holdings vs. NGL Energy Partners
Performance |
| Timeline |
| Kinetik Holdings |
| NGL Energy Partners |
Kinetik Holdings and NGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetik Holdings and NGL Energy
The main advantage of trading using opposite Kinetik Holdings and NGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings position performs unexpectedly, NGL Energy 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 NGL Energy will offset losses from the drop in NGL Energy's long position.| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. DT Midstream | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream Partners |
| NGL Energy vs. GasLog Partners LP | NGL Energy vs. Global Partners LP | NGL Energy vs. Martin Midstream Partners | NGL Energy vs. GasLog Partners 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |