Correlation Between Martin Midstream and Kinetik Holdings

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

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

Diversification Opportunities for Martin Midstream and Kinetik Holdings

0.52

Correlation Coefficient

Martin Midstream  Kinetik Holdings

Very weak diversification

The 3 months correlation between Martin and Kinetik is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Martin Midstream Partners and Kinetik Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetik Holdings and Martin Midstream 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 Martin Midstream Partners 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 Martin Midstream i.e., Martin Midstream and Kinetik Holdings go up and down completely randomly.

Pair Corralation between Martin Midstream and Kinetik Holdings

Given the investment horizon of 90 days Martin Midstream Partners is expected to under-perform the Kinetik Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Martin Midstream Partners is 1.52 times less risky than Kinetik Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The Kinetik Holdings is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  5,902  in Kinetik Holdings on September 29, 2024 and sell it today you would lose (261.00) from holding Kinetik Holdings or give up 4.42% of portfolio value over 90 days.

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

Martin Midstream Partners  vs.  Kinetik Holdings

Martin Midstream Partners

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Martin Midstream is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Kinetik Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 14 (%) 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 Martin Midstream and Kinetik Holdings

The main advantage of trading using opposite Martin Midstream and Kinetik Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Midstream 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 Martin Midstream Partners 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.

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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 Managers module to screen money managers from public funds and ETFs managed around the world.