Correlation Between INTERNET INJPADR and Kinder Morgan

Can any of the company-specific risk be diversified away by investing in both INTERNET INJPADR 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 INTERNET INJPADR and Kinder Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTERNET INJPADR 1 and Kinder Morgan, you can compare the effects of market volatilities on INTERNET INJPADR 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 INTERNET INJPADR with a short position of Kinder Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNET INJPADR and Kinder Morgan.

Diversification Opportunities for INTERNET INJPADR and Kinder Morgan

0.28

Correlation Coefficient

INTERNET INJPADR  Kinder Morgan

Modest diversification

The 3 months correlation between INTERNET and Kinder is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding INTERNET INJPADR 1 and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and INTERNET INJPADR 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 INTERNET INJPADR 1 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 INTERNET INJPADR i.e., INTERNET INJPADR and Kinder Morgan go up and down completely randomly.

Pair Corralation between INTERNET INJPADR and Kinder Morgan

Assuming the 90 days horizon INTERNET INJPADR 1 is expected to under-perform the Kinder Morgan. In addition to that, INTERNET INJPADR is 1.17 times more volatile than Kinder Morgan. It trades about -0.13 of its total potential returns per unit of risk. Kinder Morgan is currently generating about 0.01 per unit of volatility. If you would invest  2,564  in Kinder Morgan on December 22, 2024 and sell it today you would lose (4.00) from holding Kinder Morgan or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

INTERNET INJPADR 1  vs.  Kinder Morgan

INTERNET INJPADR 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTERNET INJPADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kinder Morgan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinder Morgan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kinder Morgan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERNET INJPADR and Kinder Morgan

The main advantage of trading using opposite INTERNET INJPADR and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNET INJPADR 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.

The idea behind INTERNET INJPADR 1 and Kinder Morgan 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.