Correlation Between TC Energy and Kinder Morgan
Can any of the company-specific risk be diversified away by investing in both TC Energy 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 TC Energy and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TC Energy Corp and Kinder Morgan, you can compare the effects of market volatilities on TC Energy 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 TC Energy with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC Energy and Kinder Morgan.
Diversification Opportunities for TC Energy and Kinder Morgan
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TRP and Kinder is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding TC Energy Corp and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and TC 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 TC Energy Corp 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 TC Energy i.e., TC Energy and Kinder Morgan go up and down completely randomly.
Pair Corralation between TC Energy and Kinder Morgan
Considering the 90-day investment horizon TC Energy is expected to generate 2.72 times less return on investment than Kinder Morgan. But when comparing it to its historical volatility, TC Energy Corp is 1.27 times less risky than Kinder Morgan. It trades about 0.17 of its potential returns per unit of risk. Kinder Morgan is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,434 in Kinder Morgan on August 30, 2024 and sell it today you would earn a total of 373.00 from holding Kinder Morgan or generate 15.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
TC Energy Corp vs. Kinder Morgan
Performance |
Timeline |
TC Energy Corp |
Kinder Morgan |
TC Energy and Kinder Morgan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TC Energy and Kinder Morgan
The main advantage of trading using opposite TC Energy and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Energy 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.TC Energy vs. Plains All American | TC Energy vs. Genesis Energy LP | TC Energy vs. Hess Midstream Partners | TC Energy vs. Kinder Morgan |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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