Correlation Between Federal Agricultural and Antero Resources
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Antero Resources 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 Federal Agricultural and Antero Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Antero Resources Corp, you can compare the effects of market volatilities on Federal Agricultural and Antero Resources 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 Federal Agricultural with a short position of Antero Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Antero Resources.
Diversification Opportunities for Federal Agricultural and Antero Resources
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Antero is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources Corp and Federal Agricultural 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 Federal Agricultural Mortgage are associated (or correlated) with Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Antero Resources go up and down completely randomly.
Pair Corralation between Federal Agricultural and Antero Resources
Assuming the 90 days horizon Federal Agricultural is expected to generate 1.45 times less return on investment than Antero Resources. But when comparing it to its historical volatility, Federal Agricultural Mortgage is 1.32 times less risky than Antero Resources. It trades about 0.25 of its potential returns per unit of risk. Antero Resources Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,415 in Antero Resources Corp on August 30, 2024 and sell it today you would earn a total of 638.00 from holding Antero Resources Corp or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Antero Resources Corp
Performance |
| Timeline |
| Federal Agricultural |
| Antero Resources Corp |
Federal Agricultural and Antero Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Antero Resources
The main advantage of trading using opposite Federal Agricultural and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Antero Resources 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 Antero Resources will offset losses from the drop in Antero Resources' long position.| Federal Agricultural vs. Visa Inc | Federal Agricultural vs. PayPal Holdings | Federal Agricultural vs. Capital One Financial |
| Antero Resources vs. BJs Restaurants | Antero Resources vs. Federal Agricultural Mortgage | Antero Resources vs. Hanison Construction Holdings | Antero Resources vs. Dairy Farm International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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