Correlation Between TransAtlantic Petroleum and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both TransAtlantic Petroleum and Kinder Morgan 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 TransAtlantic Petroleum and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TransAtlantic Petroleum and Kinder Morgan, you can compare the effects of market volatilities on TransAtlantic Petroleum and Kinder Morgan 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 TransAtlantic Petroleum with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAtlantic Petroleum and Kinder Morgan.
Diversification Opportunities for TransAtlantic Petroleum and Kinder Morgan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TransAtlantic and Kinder is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding TransAtlantic Petroleum and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and TransAtlantic Petroleum 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 TransAtlantic Petroleum are associated (or correlated) with Kinder Morgan. 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 has no effect on the direction of TransAtlantic Petroleum i.e., TransAtlantic Petroleum and Kinder Morgan go up and down completely randomly.
Pair Corralation between TransAtlantic Petroleum and Kinder Morgan
If you would invest 2,448 in Kinder Morgan on August 24, 2024 and sell it today you would earn a total of 406.00 from holding Kinder Morgan or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
TransAtlantic Petroleum vs. Kinder Morgan
Performance |
| Timeline |
| TransAtlantic Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kinder Morgan |
TransAtlantic Petroleum and Kinder Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TransAtlantic Petroleum and Kinder Morgan
The main advantage of trading using opposite TransAtlantic Petroleum and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAtlantic Petroleum position performs unexpectedly, Kinder Morgan 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 Morgan will offset losses from the drop in Kinder Morgan's long position.| TransAtlantic Petroleum vs. Teekay | TransAtlantic Petroleum vs. Teekay Tankers | TransAtlantic Petroleum vs. DHT Holdings | TransAtlantic Petroleum vs. Frontline |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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