Correlation Between KINDER and Where Food

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

Diversification Opportunities for KINDER and Where Food

-0.41

Correlation Coefficient

KINDER  Where Food

Very good diversification

The 3 months correlation between KINDER and Where is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN ENERGY and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes 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 Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of KINDER i.e., KINDER and Where Food go up and down completely randomly.

Pair Corralation between KINDER and Where Food

Assuming the 90 days trading horizon KINDER MORGAN ENERGY is expected to generate 23.15 times more return on investment than Where Food. However, KINDER is 23.15 times more volatile than Where Food Comes. It trades about 0.05 of its potential returns per unit of risk. Where Food Comes is currently generating about 0.0 per unit of risk. If you would invest  9,643  in KINDER MORGAN ENERGY on October 10, 2024 and sell it today you would lose (556.00) from holding KINDER MORGAN ENERGY or give up 5.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.19%
Values	Daily Returns

KINDER MORGAN ENERGY  vs.  Where Food Comes

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 current stock price disturbance, may contribute to short-term losses for the investors.

Where Food Comes

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Where Food Comes are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Where Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with KINDER and Where Food

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

The idea behind KINDER MORGAN ENERGY and Where Food Comes 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.