Correlation Between Kinder Morgan and GasLog Partners

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

By analyzing existing cross correlation between Kinder Morgan and GasLog Partners LP, you can compare the effects of market volatilities on Kinder Morgan and GasLog Partners 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 GasLog Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinder Morgan and GasLog Partners.

Diversification Opportunities for Kinder Morgan and GasLog Partners

0.52

Correlation Coefficient

Kinder Morgan  GasLog Partners

Very weak diversification

The 3 months correlation between Kinder and GasLog is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and GasLog Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GasLog Partners LP 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 GasLog Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GasLog Partners LP has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and GasLog Partners go up and down completely randomly.

Pair Corralation between Kinder Morgan and GasLog Partners

Considering the 90-day investment horizon Kinder Morgan is expected to generate 1.94 times more return on investment than GasLog Partners. However, Kinder Morgan is 1.94 times more volatile than GasLog Partners LP. It trades about 0.19 of its potential returns per unit of risk. GasLog Partners LP is currently generating about -0.01 per unit of risk. If you would invest  2,688  in Kinder Morgan on October 14, 2024 and sell it today you would earn a total of  128.00  from holding Kinder Morgan or generate 4.76% return on investment over 90 days.

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

Kinder Morgan  vs.  GasLog Partners LP

Kinder Morgan

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady primary indicators, Kinder Morgan demonstrated solid returns over the last few months and may actually be approaching a breakup point.

GasLog Partners LP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GasLog Partners LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, GasLog Partners is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinder Morgan and GasLog Partners

The main advantage of trading using opposite Kinder Morgan and GasLog Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinder Morgan position performs unexpectedly, GasLog Partners 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 GasLog Partners will offset losses from the drop in GasLog Partners' long position.

The idea behind Kinder Morgan and GasLog Partners LP 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.