Correlation Between Antero Midstream and Magna International
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on Antero Midstream and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Magna International.
Diversification Opportunities for Antero Midstream and Magna International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Antero and Magna is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Antero Midstream i.e., Antero Midstream and Magna International go up and down completely randomly.
Pair Corralation between Antero Midstream and Magna International
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.65 times more return on investment than Magna International. However, Antero Midstream Partners is 1.55 times less risky than Magna International. It trades about 0.1 of its potential returns per unit of risk. Magna International is currently generating about -0.02 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. Magna International
Performance |
| Timeline |
| Antero Midstream Partners |
| Magna International |
Antero Midstream and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and Magna International
The main advantage of trading using opposite Antero Midstream and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International'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 |
| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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