Correlation Between Kinetik Holdings and EnLink Midstream

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

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

Diversification Opportunities for Kinetik Holdings and EnLink Midstream

0.48

Correlation Coefficient

Kinetik Holdings  EnLink Midstream

Very weak diversification

The 3 months correlation between Kinetik and EnLink is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and EnLink Midstream LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream LLC and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with EnLink Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream LLC has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and EnLink Midstream go up and down completely randomly.

Pair Corralation between Kinetik Holdings and EnLink Midstream

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the EnLink Midstream. In addition to that, Kinetik Holdings is 1.51 times more volatile than EnLink Midstream LLC. It trades about -0.05 of its total potential returns per unit of risk. EnLink Midstream LLC is currently generating about -0.01 per unit of volatility. If you would invest  1,420  in EnLink Midstream LLC on December 29, 2024 and sell it today you would lose (8.00) from holding EnLink Midstream LLC or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	36.07%
Values	Daily Returns

Kinetik Holdings  vs.  EnLink Midstream LLC

Kinetik Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetik Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

EnLink Midstream LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EnLink Midstream LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, EnLink Midstream is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kinetik Holdings and EnLink Midstream

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

The idea behind Kinetik Holdings and EnLink Midstream LLC 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 Stocks Directory module to find actively traded stocks across global markets.