Correlation Between NGL Energy and Kinetik Holdings
Can any of the company-specific risk be diversified away by investing in both NGL Energy 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 NGL Energy and Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NGL Energy Partners and Kinetik Holdings, you can compare the effects of market volatilities on NGL Energy 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 NGL Energy with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGL Energy and Kinetik Holdings.
Diversification Opportunities for NGL Energy and Kinetik Holdings
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NGL and Kinetik is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding NGL Energy Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and NGL Energy 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 NGL Energy 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 NGL Energy i.e., NGL Energy and Kinetik Holdings go up and down completely randomly.
Pair Corralation between NGL Energy and Kinetik Holdings
Considering the 90-day investment horizon NGL Energy is expected to generate 1.06 times less return on investment than Kinetik Holdings. In addition to that, NGL Energy is 1.03 times more volatile than Kinetik Holdings. It trades about 0.31 of its total potential returns per unit of risk. Kinetik Holdings is currently generating about 0.33 per unit of volatility. If you would invest 4,903 in Kinetik Holdings on August 31, 2024 and sell it today you would earn a total of 963.00 from holding Kinetik Holdings or generate 19.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NGL Energy Partners vs. Kinetik Holdings
Performance |
| Timeline |
| NGL Energy Partners |
| Kinetik Holdings |
NGL Energy and Kinetik Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NGL Energy and Kinetik Holdings
The main advantage of trading using opposite NGL Energy and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NGL Energy 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.| NGL Energy vs. Atlantica Sustainable Infrastructure | NGL Energy vs. Clearway Energy | NGL Energy vs. Brookfield Renewable Corp | NGL Energy vs. Nextera Energy Partners |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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