Correlation Between Antero Midstream and Plains All
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Plains All 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 Plains All 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 Plains All American, you can compare the effects of market volatilities on Antero Midstream and Plains All 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 Plains All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Plains All.
Diversification Opportunities for Antero Midstream and Plains All
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Antero and Plains is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Antero Midstream i.e., Antero Midstream and Plains All go up and down completely randomly.
Pair Corralation between Antero Midstream and Plains All
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.99 times more return on investment than Plains All. However, Antero Midstream Partners is 1.01 times less risky than Plains All. It trades about 0.11 of its potential returns per unit of risk. Plains All American is currently generating about 0.1 per unit of risk. If you would invest 1,129 in Antero Midstream Partners on November 3, 2024 and sell it today you would earn a total of 475.00 from holding Antero Midstream Partners or generate 42.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antero Midstream Partners vs. Plains All American
Performance |
| Timeline |
| Antero Midstream Partners |
| Plains All American |
Antero Midstream and Plains All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and Plains All
The main advantage of trading using opposite Antero Midstream and Plains All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Plains All 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 Plains All will offset losses from the drop in Plains All'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 |
| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products Partners |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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