Correlation Between Antero Resources and California Resources
Can any of the company-specific risk be diversified away by investing in both Antero Resources and California Resources 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 California Resources 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 California Resources Corp, you can compare the effects of market volatilities on Antero Resources and California Resources 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 California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and California Resources.
Diversification Opportunities for Antero Resources and California Resources
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Antero and California is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of Antero Resources i.e., Antero Resources and California Resources go up and down completely randomly.
Pair Corralation between Antero Resources and California Resources
Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 1.46 times more return on investment than California Resources. However, Antero Resources is 1.46 times more volatile than California Resources Corp. It trades about 0.4 of its potential returns per unit of risk. California Resources Corp is currently generating about 0.32 per unit of risk. If you would invest 2,588 in Antero Resources Corp on September 1, 2024 and sell it today you would earn a total of 681.00 from holding Antero Resources Corp or generate 26.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antero Resources Corp vs. California Resources Corp
Performance |
| Timeline |
| Antero Resources Corp |
| California Resources Corp |
Antero Resources and California Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Resources and California Resources
The main advantage of trading using opposite Antero Resources and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.| Antero Resources vs. EQT Corporation | Antero Resources vs. Matador Resources | Antero Resources vs. Diamondback Energy | Antero Resources vs. Vital Energy |
| California Resources vs. Berry Petroleum Corp | California Resources vs. Magnolia Oil Gas | California Resources vs. Comstock Resources | California Resources vs. Gulfport Energy Operating |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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