Correlation Between Kinetik Holdings and Pure Cycle
Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings and Pure Cycle 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 Pure Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetik Holdings and Pure Cycle, you can compare the effects of market volatilities on Kinetik Holdings and Pure Cycle 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 Pure Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Pure Cycle.
Diversification Opportunities for Kinetik Holdings and Pure Cycle
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetik and Pure is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Pure Cycle go up and down completely randomly.
Pair Corralation between Kinetik Holdings and Pure Cycle
Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.88 times more return on investment than Pure Cycle. However, Kinetik Holdings is 1.13 times less risky than Pure Cycle. It trades about 0.1 of its potential returns per unit of risk. Pure Cycle is currently generating about 0.04 per unit of risk. If you would invest 2,809 in Kinetik Holdings on August 26, 2024 and sell it today you would earn a total of 3,356 from holding Kinetik Holdings or generate 119.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetik Holdings vs. Pure Cycle
Performance |
| Timeline |
| Kinetik Holdings |
| Pure Cycle |
Kinetik Holdings and Pure Cycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetik Holdings and Pure Cycle
The main advantage of trading using opposite Kinetik Holdings and Pure Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings position performs unexpectedly, Pure Cycle 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 Pure Cycle will offset losses from the drop in Pure Cycle'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 |
| Pure Cycle vs. Cadiz Inc | Pure Cycle vs. Artesian Resources | Pure Cycle vs. Global Water Resources | Pure Cycle vs. Parke Bancorp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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