Correlation Between Antero Midstream and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Western Midstream 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 Western Midstream 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 Western Midstream Partners, you can compare the effects of market volatilities on Antero Midstream and Western Midstream 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Western Midstream.
Diversification Opportunities for Antero Midstream and Western Midstream
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Antero and Western is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Antero Midstream i.e., Antero Midstream and Western Midstream go up and down completely randomly.
Pair Corralation between Antero Midstream and Western Midstream
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.93 times more return on investment than Western Midstream. However, Antero Midstream Partners is 1.08 times less risky than Western Midstream. It trades about 0.15 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.13 per unit of risk. If you would invest 1,526 in Antero Midstream Partners on November 3, 2024 and sell it today you would earn a total of 78.00 from holding Antero Midstream Partners or generate 5.11% 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. Western Midstream Partners
Performance |
| Timeline |
| Antero Midstream Partners |
| Western Midstream |
Antero Midstream and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and Western Midstream
The main advantage of trading using opposite Antero Midstream and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream'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 |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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