Correlation Between Kinder Morgan and JCDecaux
Can any of the company-specific risk be diversified away by investing in both Kinder Morgan and JCDecaux 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 Kinder Morgan and JCDecaux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinder Morgan and JCDecaux SA, you can compare the effects of market volatilities on Kinder Morgan and JCDecaux 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 Kinder Morgan with a short position of JCDecaux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and JCDecaux.
Diversification Opportunities for Kinder Morgan and JCDecaux
-0.96 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kinder and JCDecaux is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA and Kinder Morgan 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 Kinder Morgan are associated (or correlated) with JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and JCDecaux go up and down completely randomly.
Pair Corralation between Kinder Morgan and JCDecaux
Assuming the 90 days horizon Kinder Morgan is expected to under-perform the JCDecaux. But the stock apears to be less risky and, when comparing its historical volatility, Kinder Morgan is 1.33 times less risky than JCDecaux. The stock trades about -0.15 of its potential returns per unit of risk. The JCDecaux SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,441 in JCDecaux SA on September 24, 2024 and sell it today you would earn a total of 39.00 from holding JCDecaux SA or generate 2.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Kinder Morgan vs. JCDecaux SA
Performance |
Timeline |
Kinder Morgan |
JCDecaux SA |
Kinder Morgan and JCDecaux Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kinder Morgan and JCDecaux
The main advantage of trading using opposite Kinder Morgan and JCDecaux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, JCDecaux 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 JCDecaux will offset losses from the drop in JCDecaux's long position.Kinder Morgan vs. Enbridge | Kinder Morgan vs. The Williams Companies | Kinder Morgan vs. ONEOK Inc | Kinder Morgan vs. Pembina Pipeline Corp |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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