Correlation Between Kinetik Holdings and Tidewater Midstream

Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings and Tidewater 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 Tidewater 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 Tidewater Midstream and, you can compare the effects of market volatilities on Kinetik Holdings and Tidewater 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 Tidewater Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Tidewater Midstream.

Diversification Opportunities for Kinetik Holdings and Tidewater Midstream

-0.24

Correlation Coefficient

Kinetik Holdings  Tidewater Midstream

Very good diversification

The 3 months correlation between Kinetik and Tidewater is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Tidewater Midstream and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater Midstream and 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 Tidewater Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater Midstream and has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Tidewater Midstream go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Tidewater Midstream

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Tidewater Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Kinetik Holdings is 4.7 times less risky than Tidewater Midstream. The stock trades about -0.05 of its potential returns per unit of risk. The Tidewater Midstream and is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Tidewater Midstream and on December 30, 2024 and sell it today you would earn a total of  9.50  from holding Tidewater Midstream and or generate 111.76% return on investment over 90 days.

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

Kinetik Holdings  vs.  Tidewater Midstream and

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.

Tidewater Midstream and

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater Midstream and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Tidewater Midstream reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Tidewater Midstream

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

The idea behind Kinetik Holdings and Tidewater Midstream and 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.