Correlation Between KINDER and Ioneer

Can any of the company-specific risk be diversified away by investing in both KINDER and Ioneer 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 Ioneer 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 ioneer Ltd American, you can compare the effects of market volatilities on KINDER and Ioneer 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 Ioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINDER and Ioneer.

Diversification Opportunities for KINDER and Ioneer

0.25

Correlation Coefficient

KINDER  Ioneer

Modest diversification

The 3 months correlation between KINDER and Ioneer is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN ENERGY and ioneer Ltd American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ioneer American 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 Ioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ioneer American has no effect on the direction of KINDER i.e., KINDER and Ioneer go up and down completely randomly.

Pair Corralation between KINDER and Ioneer

Assuming the 90 days trading horizon KINDER MORGAN ENERGY is expected to generate 0.18 times more return on investment than Ioneer. However, KINDER MORGAN ENERGY is 5.41 times less risky than Ioneer. It trades about -0.04 of its potential returns per unit of risk. ioneer Ltd American is currently generating about -0.09 per unit of risk. If you would invest  9,734  in KINDER MORGAN ENERGY on October 8, 2024 and sell it today you would lose (211.00) from holding KINDER MORGAN ENERGY or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

KINDER MORGAN ENERGY  vs.  ioneer Ltd American

KINDER MORGAN ENERGY

Risk-Adjusted Performance

0 of 100

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.

ioneer American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ioneer Ltd American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with KINDER and Ioneer

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

The idea behind KINDER MORGAN ENERGY and ioneer Ltd American 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.