Correlation Between Tidewater Midstream and Kinetik Holdings

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

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

Diversification Opportunities for Tidewater Midstream and Kinetik Holdings

0.67

Correlation Coefficient

Tidewater Midstream  Kinetik Holdings

Poor diversification

The 3 months correlation between Tidewater and Kinetik is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater Midstream and and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Tidewater Midstream 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 Tidewater Midstream and are associated (or correlated) with Kinetik Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetik Holdings has no effect on the direction of Tidewater Midstream i.e., Tidewater Midstream and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Tidewater Midstream and Kinetik Holdings

Assuming the 90 days horizon Tidewater Midstream and is expected to generate 4.83 times more return on investment than Kinetik Holdings. However, Tidewater Midstream is 4.83 times more volatile than Kinetik Holdings. It trades about 0.12 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.04 per unit of risk. If you would invest  9.01  in Tidewater Midstream and on December 1, 2024 and sell it today you would earn a total of  4.99  from holding Tidewater Midstream and or generate 55.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.67%
Values	Daily Returns

Tidewater Midstream and  vs.  Kinetik Holdings

Tidewater Midstream and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater Midstream and are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Tidewater Midstream reported solid returns over the last few months and may actually be approaching a breakup point.

Kinetik Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinetik Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Tidewater Midstream and Kinetik Holdings

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

The idea behind Tidewater Midstream and and Kinetik Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..