Correlation Between Suburban Propane and Kinetik Holdings
Can any of the company-specific risk be diversified away by investing in both Suburban Propane 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 Suburban Propane and Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suburban Propane Partners and Kinetik Holdings, you can compare the effects of market volatilities on Suburban Propane 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 Suburban Propane with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Kinetik Holdings.
Diversification Opportunities for Suburban Propane and Kinetik Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suburban and Kinetik is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Suburban Propane 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 Suburban Propane 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 Suburban Propane i.e., Suburban Propane and Kinetik Holdings go up and down completely randomly.
Pair Corralation between Suburban Propane and Kinetik Holdings
Considering the 90-day investment horizon Suburban Propane is expected to generate 2.74 times less return on investment than Kinetik Holdings. But when comparing it to its historical volatility, Suburban Propane Partners is 1.0 times less risky than Kinetik Holdings. It trades about 0.15 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 4,776 in Kinetik Holdings on September 2, 2024 and sell it today you would earn a total of 1,126 from holding Kinetik Holdings or generate 23.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suburban Propane Partners vs. Kinetik Holdings
Performance |
| Timeline |
| Suburban Propane Partners |
| Kinetik Holdings |
Suburban Propane and Kinetik Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Kinetik Holdings
The main advantage of trading using opposite Suburban Propane and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. Atmos Energy | Suburban Propane vs. One Gas | Suburban Propane vs. NiSource |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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