Correlation Between Kinder Morgan and Navigator Holdings

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

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

Diversification Opportunities for Kinder Morgan and Navigator Holdings

-0.45

Correlation Coefficient

Kinder Morgan  Navigator Holdings

Very good diversification

The 3 months correlation between Kinder and Navigator is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kinder Morgan and Navigator Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigator Holdings 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 Navigator Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigator Holdings has no effect on the direction of Kinder Morgan i.e., Kinder Morgan and Navigator Holdings go up and down completely randomly.

Pair Corralation between Kinder Morgan and Navigator Holdings

Considering the 90-day investment horizon Kinder Morgan is expected to generate 0.65 times more return on investment than Navigator Holdings. However, Kinder Morgan is 1.53 times less risky than Navigator Holdings. It trades about 0.13 of its potential returns per unit of risk. Navigator Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,490  in Kinder Morgan on October 5, 2024 and sell it today you would earn a total of  1,321  from holding Kinder Morgan or generate 88.66% return on investment over 90 days.

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

Kinder Morgan  vs.  Navigator Holdings

Kinder Morgan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 16 (%) 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.

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Navigator Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Kinder Morgan and Navigator Holdings

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

The idea behind Kinder Morgan and Navigator 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.