Correlation Between Kinetik Holdings and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings 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 Kinetik Holdings and Western Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetik Holdings and Western Midstream Partners, you can compare the effects of market volatilities on Kinetik Holdings 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 Kinetik Holdings with a short position of Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Western Midstream.
Diversification Opportunities for Kinetik Holdings and Western Midstream
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kinetik and Western is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 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 Kinetik Holdings i.e., Kinetik Holdings and Western Midstream go up and down completely randomly.
Pair Corralation between Kinetik Holdings and Western Midstream
Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.53 times more return on investment than Western Midstream. However, Kinetik Holdings is 1.53 times more volatile than Western Midstream Partners. It trades about 0.42 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.04 per unit of risk. If you would invest 4,991 in Kinetik Holdings on August 24, 2024 and sell it today you would earn a total of 1,223 from holding Kinetik Holdings or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetik Holdings vs. Western Midstream Partners
Performance |
| Timeline |
| Kinetik Holdings |
| Western Midstream |
Kinetik Holdings and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetik Holdings and Western Midstream
The main advantage of trading using opposite Kinetik Holdings and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings 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.| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream Partners | Kinetik Holdings vs. Plains All American |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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