Correlation Between Antero Resources and APA
Can any of the company-specific risk be diversified away by investing in both Antero Resources and APA 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 Resources and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antero Resources Corp and APA Corporation, you can compare the effects of market volatilities on Antero Resources and APA 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 Resources with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and APA.
Diversification Opportunities for Antero Resources and APA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Antero and APA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Antero Resources 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 Resources Corp are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Antero Resources i.e., Antero Resources and APA go up and down completely randomly.
Pair Corralation between Antero Resources and APA
Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 1.12 times more return on investment than APA. However, Antero Resources is 1.12 times more volatile than APA Corporation. It trades about 0.02 of its potential returns per unit of risk. APA Corporation is currently generating about -0.04 per unit of risk. If you would invest 3,098 in Antero Resources Corp on August 27, 2024 and sell it today you would earn a total of 213.00 from holding Antero Resources Corp or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antero Resources Corp vs. APA Corp.
Performance |
| Timeline |
| Antero Resources Corp |
| APA Corporation |
Antero Resources and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Resources and APA
The main advantage of trading using opposite Antero Resources and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Antero Resources vs. Devon Energy | Antero Resources vs. ConocoPhillips | Antero Resources vs. Occidental Petroleum | Antero Resources vs. Permian Resources |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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