Correlation Between Antero Midstream and American Axle
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and American Axle 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 Antero Midstream and American Axle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antero Midstream Partners and American Axle Manufacturing, you can compare the effects of market volatilities on Antero Midstream and American Axle 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 Antero Midstream with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and American Axle.
Diversification Opportunities for Antero Midstream and American Axle
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Antero and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and American Axle Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Axle Manufa and Antero 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 Antero Midstream Partners are associated (or correlated) with American Axle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Axle Manufa has no effect on the direction of Antero Midstream i.e., Antero Midstream and American Axle go up and down completely randomly.
Pair Corralation between Antero Midstream and American Axle
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.48 times more return on investment than American Axle. However, Antero Midstream Partners is 2.08 times less risky than American Axle. It trades about 0.1 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about -0.01 per unit of risk. If you would invest 1,192 in Antero Midstream Partners on September 2, 2024 and sell it today you would earn a total of 405.00 from holding Antero Midstream Partners or generate 33.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antero Midstream Partners vs. American Axle Manufacturing
Performance |
| Timeline |
| Antero Midstream Partners |
| American Axle Manufa |
Antero Midstream and American Axle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and American Axle
The main advantage of trading using opposite Antero Midstream and American Axle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, American Axle 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 American Axle will offset losses from the drop in American Axle's long position.| Antero Midstream vs. EnLink Midstream LLC | Antero Midstream vs. Western Midstream Partners | Antero Midstream vs. Plains GP Holdings | Antero Midstream vs. Plains All American |
| American Axle vs. Ford Motor | American Axle vs. General Motors | American Axle vs. Goodyear Tire Rubber | American Axle vs. Li Auto |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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