Correlation Between Morgan Advanced and KINDER

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

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

Diversification Opportunities for Morgan Advanced and KINDER

-0.32

Correlation Coefficient

Morgan Advanced  KINDER

Very good diversification

The 3 months correlation between Morgan and KINDER is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC and Morgan Advanced 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 Morgan Advanced Materials 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 INC has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and KINDER go up and down completely randomly.

Pair Corralation between Morgan Advanced and KINDER

Assuming the 90 days horizon Morgan Advanced Materials is expected to under-perform the KINDER. In addition to that, Morgan Advanced is 1.58 times more volatile than KINDER MORGAN INC. It trades about -0.13 of its total potential returns per unit of risk. KINDER MORGAN INC is currently generating about 0.02 per unit of volatility. If you would invest  8,720  in KINDER MORGAN INC on December 24, 2024 and sell it today you would earn a total of  99.00  from holding KINDER MORGAN INC or generate 1.14% return on investment over 90 days.

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

Morgan Advanced Materials  vs.  KINDER MORGAN INC

Morgan Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KINDER MORGAN INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KINDER MORGAN INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Morgan Advanced and KINDER

The main advantage of trading using opposite Morgan Advanced and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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 Morgan Advanced Materials and KINDER MORGAN INC 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.