Correlation Between Marchex and KINDER

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

By analyzing existing cross correlation between Marchex and KINDER MORGAN ENERGY, you can compare the effects of market volatilities on Marchex and KINDER 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 Marchex with a short position of KINDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marchex and KINDER.

Diversification Opportunities for Marchex and KINDER

0.31

Correlation Coefficient

Marchex  KINDER

Weak diversification

The 3 months correlation between Marchex and KINDER is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY and Marchex 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 Marchex are associated (or correlated) with KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Marchex i.e., Marchex and KINDER go up and down completely randomly.

Pair Corralation between Marchex and KINDER

Given the investment horizon of 90 days Marchex is expected to under-perform the KINDER. In addition to that, Marchex is 1.51 times more volatile than KINDER MORGAN ENERGY. It trades about -0.03 of its total potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.01 per unit of volatility. If you would invest  10,079  in KINDER MORGAN ENERGY on December 24, 2024 and sell it today you would earn a total of  25.00  from holding KINDER MORGAN ENERGY or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Marchex  vs.  KINDER MORGAN ENERGY

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marchex and KINDER

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

The idea behind Marchex and KINDER MORGAN ENERGY 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.