Correlation Between Sysco and Kinder Morgan

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

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

Diversification Opportunities for Sysco and Kinder Morgan

0.77

Correlation Coefficient

Sysco  Kinder Morgan

Poor diversification

The 3 months correlation between Sysco and Kinder is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan and Sysco 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 Sysco 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 Sysco i.e., Sysco and Kinder Morgan go up and down completely randomly.

Pair Corralation between Sysco and Kinder Morgan

Assuming the 90 days horizon Sysco is expected to generate 2.87 times less return on investment than Kinder Morgan. But when comparing it to its historical volatility, Sysco is 1.61 times less risky than Kinder Morgan. It trades about 0.13 of its potential returns per unit of risk. Kinder Morgan is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,938  in Kinder Morgan on September 22, 2024 and sell it today you would earn a total of  603.00  from holding Kinder Morgan or generate 31.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Sysco  vs.  Kinder Morgan

Sysco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sysco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinder Morgan

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kinder Morgan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sysco and Kinder Morgan

The main advantage of trading using opposite Sysco and Kinder Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco 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 Sysco 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.