Correlation Between KVH Industries and Western Midstream
Can any of the company-specific risk be diversified away by investing in both KVH Industries 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 KVH Industries and Western Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Western Midstream Partners, you can compare the effects of market volatilities on KVH Industries 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 KVH Industries with a short position of Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Western Midstream.
Diversification Opportunities for KVH Industries and Western Midstream
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KVH and Western is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream and KVH Industries 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 KVH Industries 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 KVH Industries i.e., KVH Industries and Western Midstream go up and down completely randomly.
Pair Corralation between KVH Industries and Western Midstream
Given the investment horizon of 90 days KVH Industries is expected to generate 1.08 times more return on investment than Western Midstream. However, KVH Industries is 1.08 times more volatile than Western Midstream Partners. It trades about 0.56 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.21 per unit of risk. If you would invest 457.00 in KVH Industries on September 5, 2024 and sell it today you would earn a total of 127.00 from holding KVH Industries or generate 27.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Western Midstream Partners
Performance |
| Timeline |
| KVH Industries |
| Western Midstream |
KVH Industries and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Western Midstream
The main advantage of trading using opposite KVH Industries and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries 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.| KVH Industries vs. Cambium Networks Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and | KVH Industries vs. ADTRAN Inc |
| Western Midstream vs. EnLink Midstream LLC | Western Midstream vs. Plains GP Holdings | Western Midstream vs. Hess Midstream Partners | Western Midstream vs. Enterprise Products Partners |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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