Correlation Between Antero Resources and Permian Resources
Can any of the company-specific risk be diversified away by investing in both Antero Resources and Permian 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 Permian 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 Permian Resources, you can compare the effects of market volatilities on Antero Resources and Permian 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 Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and Permian Resources.
Diversification Opportunities for Antero Resources and Permian Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Antero and Permian is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources 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 Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Antero Resources i.e., Antero Resources and Permian Resources go up and down completely randomly.
Pair Corralation between Antero Resources and Permian Resources
Allowing for the 90-day total investment horizon Antero Resources is expected to generate 1.27 times less return on investment than Permian Resources. In addition to that, Antero Resources is 1.08 times more volatile than Permian Resources. It trades about 0.04 of its total potential returns per unit of risk. Permian Resources is currently generating about 0.06 per unit of volatility. If you would invest 944.00 in Permian Resources on October 20, 2024 and sell it today you would earn a total of 656.00 from holding Permian Resources or generate 69.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antero Resources Corp vs. Permian Resources
Performance |
| Timeline |
| Antero Resources Corp |
| Permian Resources |
Antero Resources and Permian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Resources and Permian Resources
The main advantage of trading using opposite Antero Resources and Permian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, Permian 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 Permian Resources will offset losses from the drop in Permian Resources' long position.| Antero Resources vs. EQT Corporation | Antero Resources vs. Matador Resources | Antero Resources vs. Diamondback Energy | Antero Resources vs. Vital Energy |
| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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