Correlation Between Antero Midstream and Alliant Energy
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Alliant 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 Antero Midstream and Alliant Energy 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 Alliant Energy Corp, you can compare the effects of market volatilities on Antero Midstream and Alliant 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 Antero Midstream with a short position of Alliant Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Alliant Energy.
Diversification Opportunities for Antero Midstream and Alliant Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Antero and Alliant is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp 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 Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of Antero Midstream i.e., Antero Midstream and Alliant Energy go up and down completely randomly.
Pair Corralation between Antero Midstream and Alliant Energy
Allowing for the 90-day total investment horizon Antero Midstream is expected to generate 2.05 times less return on investment than Alliant Energy. In addition to that, Antero Midstream is 1.15 times more volatile than Alliant Energy Corp. It trades about 0.08 of its total potential returns per unit of risk. Alliant Energy Corp is currently generating about 0.18 per unit of volatility. If you would invest 4,904 in Alliant Energy Corp on August 25, 2024 and sell it today you would earn a total of 1,428 from holding Alliant Energy Corp or generate 29.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Antero Midstream Partners vs. Alliant Energy Corp
Performance |
| Timeline |
| Antero Midstream Partners |
| Alliant Energy Corp |
Antero Midstream and Alliant Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and Alliant Energy
The main advantage of trading using opposite Antero Midstream and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Alliant 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 Alliant Energy will offset losses from the drop in Alliant Energy's long position.The idea behind Antero Midstream Partners and Alliant Energy 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.| Alliant Energy vs. Dominion Energy | Alliant Energy vs. Consolidated Edison | Alliant Energy vs. Eversource Energy | Alliant Energy vs. FirstEnergy |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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