Correlation Between Kinetik Holdings and Teekay

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

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

Diversification Opportunities for Kinetik Holdings and Teekay

0.71

Correlation Coefficient

Kinetik Holdings  Teekay

Poor diversification

The 3 months correlation between Kinetik and Teekay is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Teekay go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Teekay

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Teekay. In addition to that, Kinetik Holdings is 1.01 times more volatile than Teekay. It trades about -0.05 of its total potential returns per unit of risk. Teekay is currently generating about 0.0 per unit of volatility. If you would invest  681.00  in Teekay on December 28, 2024 and sell it today you would lose (14.00) from holding Teekay or give up 2.06% of portfolio value over 90 days.

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

Kinetik Holdings  vs.  Teekay

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.

Teekay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teekay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teekay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kinetik Holdings and Teekay

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

The idea behind Kinetik Holdings and Teekay 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.