Correlation Between Natera and KINDER

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

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

Diversification Opportunities for Natera and KINDER

0.55

Correlation Coefficient

Natera  KINDER

Very weak diversification

The 3 months correlation between Natera and KINDER is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and KINDER MORGAN FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN FIN and Natera 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 Natera Inc 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 FIN has no effect on the direction of Natera i.e., Natera and KINDER go up and down completely randomly.

Pair Corralation between Natera and KINDER

Given the investment horizon of 90 days Natera Inc is expected to generate 1.46 times more return on investment than KINDER. However, Natera is 1.46 times more volatile than KINDER MORGAN FIN. It trades about -0.02 of its potential returns per unit of risk. KINDER MORGAN FIN is currently generating about -0.33 per unit of risk. If you would invest  16,439  in Natera Inc on September 24, 2024 and sell it today you would lose (251.00) from holding Natera Inc or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.0%
Values	Daily Returns

Natera Inc  vs.  KINDER MORGAN FIN

Natera Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

KINDER MORGAN FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KINDER MORGAN FIN investors.

Pair Trading with Natera and KINDER

The main advantage of trading using opposite Natera and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natera 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 Natera Inc and KINDER MORGAN FIN 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.