Correlation Between Kinetik Holdings and NuStar Energy

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

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

Diversification Opportunities for Kinetik Holdings and NuStar Energy

0.72

Correlation Coefficient

Kinetik Holdings  NuStar Energy

Poor diversification

The 3 months correlation between Kinetik and NuStar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and NuStar Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuStar Energy LP 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 NuStar Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuStar Energy LP has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and NuStar Energy go up and down completely randomly.

Pair Corralation between Kinetik Holdings and NuStar Energy

If you would invest  4,273  in Kinetik Holdings on September 3, 2024 and sell it today you would earn a total of  1,629  from holding Kinetik Holdings or generate 38.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Kinetik Holdings  vs.  NuStar Energy LP

Kinetik Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 21 (%) 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.

NuStar Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kinetik Holdings and NuStar Energy

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

The idea behind Kinetik Holdings and NuStar Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.