Correlation Between Navigator Holdings and Kinder Morgan

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

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

Diversification Opportunities for Navigator Holdings and Kinder Morgan

-0.45

Correlation Coefficient

Navigator Holdings  Kinder Morgan

Very good diversification

The 3 months correlation between Navigator and Kinder is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and Navigator 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 Navigator Holdings are associated (or correlated) with Kinder Morgan. 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 has no effect on the direction of Navigator Holdings i.e., Navigator Holdings and Kinder Morgan go up and down completely randomly.

Pair Corralation between Navigator Holdings and Kinder Morgan

Given the investment horizon of 90 days Navigator Holdings is expected to generate 2.06 times less return on investment than Kinder Morgan. In addition to that, Navigator Holdings is 1.53 times more volatile than Kinder Morgan. It trades about 0.04 of its total potential returns per unit of risk. Kinder Morgan is currently generating about 0.13 per unit of volatility. If you would invest  1,490  in Kinder Morgan on October 5, 2024 and sell it today you would earn a total of  1,321  from holding Kinder Morgan or generate 88.66% return on investment over 90 days.

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

Navigator Holdings  vs.  Kinder Morgan

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Navigator Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kinder Morgan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady primary indicators, Kinder Morgan demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navigator Holdings and Kinder Morgan

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

The idea behind Navigator Holdings and Kinder Morgan 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..