Correlation Between Stepan and KINDER
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By analyzing existing cross correlation between Stepan Company and KINDER MORGAN INC, you can compare the effects of market volatilities on Stepan and KINDER 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 Stepan with a short position of KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and KINDER.
Diversification Opportunities for Stepan and KINDER
Very weak diversification
The 3 months correlation between Stepan and KINDER is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC and Stepan 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 Stepan Company are associated (or correlated) with KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Stepan i.e., Stepan and KINDER go up and down completely randomly.
Pair Corralation between Stepan and KINDER
Considering the 90-day investment horizon Stepan is expected to generate 1.34 times less return on investment than KINDER. In addition to that, Stepan is 2.86 times more volatile than KINDER MORGAN INC. It trades about 0.04 of its total potential returns per unit of risk. KINDER MORGAN INC is currently generating about 0.15 per unit of volatility. If you would invest 8,707 in KINDER MORGAN INC on November 9, 2024 and sell it today you would earn a total of 182.00 from holding KINDER MORGAN INC or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. KINDER MORGAN INC
Performance |
| Timeline |
| Stepan Company |
| KINDER MORGAN INC |
Stepan and KINDER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and KINDER
The main advantage of trading using opposite Stepan and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER's long position.The idea behind Stepan Company and KINDER MORGAN INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| KINDER vs. WT Offshore | KINDER vs. Marfrig Global Foods | KINDER vs. Lifeway Foods | KINDER vs. Austevoll Seafood ASA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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