Correlation Between Kinetik Holdings and Avient Corp

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

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

Diversification Opportunities for Kinetik Holdings and Avient Corp

0.9

Correlation Coefficient

Kinetik Holdings  Avient Corp

Almost no diversification

The 3 months correlation between Kinetik and Avient is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Avient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avient Corp 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 Avient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avient Corp has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Avient Corp go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Avient Corp

Given the investment horizon of 90 days Kinetik Holdings is expected to generate 1.08 times less return on investment than Avient Corp. But when comparing it to its historical volatility, Kinetik Holdings is 1.16 times less risky than Avient Corp. It trades about 0.22 of its potential returns per unit of risk. Avient Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,294  in Avient Corp on February 20, 2024 and sell it today you would earn a total of  264.00  from holding Avient Corp or generate 6.15% return on investment over 90 days.

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

Kinetik Holdings  vs.  Avient Corp

Kinetik Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 19 (%) 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.

Avient Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Avient Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetik Holdings and Avient Corp

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

The idea behind Kinetik Holdings and Avient Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.