Correlation Between Excelerate Energy and Kinetik Holdings

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

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

Diversification Opportunities for Excelerate Energy and Kinetik Holdings

0.96

Correlation Coefficient

Excelerate Energy  Kinetik Holdings

Almost no diversification

The 3 months correlation between Excelerate and Kinetik is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Excelerate Energy and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Excelerate Energy 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 Excelerate Energy 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 Excelerate Energy i.e., Excelerate Energy and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Excelerate Energy and Kinetik Holdings

Allowing for the 90-day total investment horizon Excelerate Energy is expected to generate 1.42 times more return on investment than Kinetik Holdings. However, Excelerate Energy is 1.42 times more volatile than Kinetik Holdings. It trades about 0.31 of its potential returns per unit of risk. Kinetik Holdings is currently generating about 0.27 per unit of risk. If you would invest  1,831  in Excelerate Energy on August 31, 2024 and sell it today you would earn a total of  1,238  from holding Excelerate Energy or generate 67.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Excelerate Energy  vs.  Kinetik Holdings

Excelerate Energy

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kinetik Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Excelerate Energy and Kinetik Holdings

The main advantage of trading using opposite Excelerate Energy and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excelerate Energy 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 Excelerate Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.