Correlation Between Kinetik Holdings and Genesis Energy

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

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

Diversification Opportunities for Kinetik Holdings and Genesis Energy

-0.7

Correlation Coefficient

Kinetik Holdings  Genesis Energy

Excellent diversification

The 3 months correlation between Kinetik and Genesis is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Genesis Energy go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Genesis Energy

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.23 times more return on investment than Genesis Energy. However, Kinetik Holdings is 1.23 times more volatile than Genesis Energy LP. It trades about -0.05 of its potential returns per unit of risk. Genesis Energy LP is currently generating about -0.42 per unit of risk. If you would invest  5,866  in Kinetik Holdings on September 28, 2024 and sell it today you would lose (165.00) from holding Kinetik Holdings or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kinetik Holdings  vs.  Genesis Energy LP

Kinetik Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 15 (%) 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.

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kinetik Holdings and Genesis Energy

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

The idea behind Kinetik Holdings and Genesis Energy LP 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.