Correlation Between Kinetik Holdings and WEC Energy

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

Diversification Opportunities for Kinetik Holdings and WEC Energy

0.63

Correlation Coefficient

Kinetik Holdings  WEC Energy

Poor diversification

The 3 months correlation between Kinetik and WEC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and WEC Energy go up and down completely randomly.

Pair Corralation between Kinetik Holdings and WEC Energy

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 2.37 times more return on investment than WEC Energy. However, Kinetik Holdings is 2.37 times more volatile than WEC Energy Group. It trades about 0.16 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.01 per unit of risk. If you would invest  4,654  in Kinetik Holdings on September 23, 2024 and sell it today you would earn a total of  1,122  from holding Kinetik Holdings or generate 24.11% return on investment over 90 days.

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

Kinetik Holdings  vs.  WEC Energy Group

Kinetik Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 12 (%) 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.

WEC Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WEC Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WEC Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kinetik Holdings and WEC Energy

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

The idea behind Kinetik Holdings and WEC Energy Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.