Correlation Between Kinetik Holdings and NiSource

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

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

Diversification Opportunities for Kinetik Holdings and NiSource

0.92

Correlation Coefficient

Kinetik Holdings  NiSource

Almost no diversification

The 3 months correlation between Kinetik and NiSource is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and NiSource go up and down completely randomly.

Pair Corralation between Kinetik Holdings and NiSource

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 2.18 times more return on investment than NiSource. However, Kinetik Holdings is 2.18 times more volatile than NiSource. It trades about 0.13 of its potential returns per unit of risk. NiSource is currently generating about 0.23 per unit of risk. If you would invest  4,152  in Kinetik Holdings on September 30, 2024 and sell it today you would earn a total of  1,489  from holding Kinetik Holdings or generate 35.86% return on investment over 90 days.

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

Kinetik Holdings  vs.  NiSource

Kinetik Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 14 (%) 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.

NiSource

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, NiSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetik Holdings and NiSource

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

The idea behind Kinetik Holdings and NiSource 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.