Correlation Between Holly Energy and Kinetik Holdings

Can any of the company-specific risk be diversified away by investing in both Holly Energy 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 Holly Energy and Kinetik Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Holly Energy Partners and Kinetik Holdings, you can compare the effects of market volatilities on Holly Energy 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 Holly Energy with a short position of Kinetik Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holly Energy and Kinetik Holdings.

Diversification Opportunities for Holly Energy and Kinetik Holdings

0.89

Correlation Coefficient

Holly Energy  Kinetik Holdings

Very poor diversification

The 3 months correlation between Holly and Kinetik is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Holly Energy Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Holly 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 Holly Energy 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 Holly Energy i.e., Holly Energy and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Holly Energy and Kinetik Holdings

If you would invest  4,273  in Kinetik Holdings on September 3, 2024 and sell it today you would earn a total of  1,629  from holding Kinetik Holdings or generate 38.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Holly Energy Partners  vs.  Kinetik Holdings

Holly Energy Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holly Energy Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Holly Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Kinetik Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holly Energy and Kinetik Holdings

The main advantage of trading using opposite Holly Energy and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holly Energy 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.

The idea behind Holly Energy Partners and Kinetik Holdings 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.

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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.