Correlation Between KINDER and Siriuspoint

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Can any of the company-specific risk be diversified away by investing in both KINDER and Siriuspoint 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 KINDER and Siriuspoint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINDER MORGAN ENERGY and Siriuspoint, you can compare the effects of market volatilities on KINDER and Siriuspoint 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 KINDER with a short position of Siriuspoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINDER and Siriuspoint.

Diversification Opportunities for KINDER and Siriuspoint

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between KINDER and Siriuspoint is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN ENERGY and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint and KINDER 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 KINDER MORGAN ENERGY are associated (or correlated) with Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of KINDER i.e., KINDER and Siriuspoint go up and down completely randomly.

Pair Corralation between KINDER and Siriuspoint

Assuming the 90 days trading horizon KINDER MORGAN ENERGY is expected to under-perform the Siriuspoint. But the bond apears to be less risky and, when comparing its historical volatility, KINDER MORGAN ENERGY is 2.31 times less risky than Siriuspoint. The bond trades about -0.05 of its potential returns per unit of risk. The Siriuspoint is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,317  in Siriuspoint on October 7, 2024 and sell it today you would earn a total of  253.00  from holding Siriuspoint or generate 19.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy77.78%
ValuesDaily Returns

KINDER MORGAN ENERGY  vs.  Siriuspoint

 Performance 
       Timeline  
KINDER MORGAN ENERGY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Siriuspoint 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint unveiled solid returns over the last few months and may actually be approaching a breakup point.

KINDER and Siriuspoint Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KINDER and Siriuspoint

The main advantage of trading using opposite KINDER and Siriuspoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINDER position performs unexpectedly, Siriuspoint 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 Siriuspoint will offset losses from the drop in Siriuspoint's long position.
The idea behind KINDER MORGAN ENERGY and Siriuspoint 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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