Correlation Between Magellan Midstream and Kinetik Holdings
Can any of the company-specific risk be diversified away by investing in both Magellan Midstream and Kinetik Holdings 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 Magellan Midstream and Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Midstream Partners and Kinetik Holdings, you can compare the effects of market volatilities on Magellan Midstream and Kinetik Holdings 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 Magellan Midstream with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Midstream and Kinetik Holdings.
Diversification Opportunities for Magellan Midstream and Kinetik Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magellan and Kinetik is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Midstream Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Magellan Midstream 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 Magellan Midstream Partners are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Magellan Midstream i.e., Magellan Midstream and Kinetik Holdings go up and down completely randomly.
Pair Corralation between Magellan Midstream and Kinetik Holdings
If you would invest 4,892 in Kinetik Holdings on August 28, 2024 and sell it today you would earn a total of 1,026 from holding Kinetik Holdings or generate 20.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Magellan Midstream Partners vs. Kinetik Holdings
Performance |
| Timeline |
| Magellan Midstream |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kinetik Holdings |
Magellan Midstream and Kinetik Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magellan Midstream and Kinetik Holdings
The main advantage of trading using opposite Magellan Midstream and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Midstream position performs unexpectedly, Kinetik Holdings 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 Kinetik Holdings will offset losses from the drop in Kinetik Holdings' long position.| Magellan Midstream vs. Kinder Morgan | Magellan Midstream vs. Enterprise Products Partners | Magellan Midstream vs. Williams Companies | Magellan Midstream vs. MPLX LP |
| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. DT Midstream | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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