Correlation Between NorthWestern and Antero Midstream
Can any of the company-specific risk be diversified away by investing in both NorthWestern and Antero 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 NorthWestern and Antero Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorthWestern and Antero Midstream Partners, you can compare the effects of market volatilities on NorthWestern and Antero 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 NorthWestern with a short position of Antero Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorthWestern and Antero Midstream.
Diversification Opportunities for NorthWestern and Antero Midstream
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NorthWestern and Antero is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NorthWestern and Antero Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Midstream Partners and NorthWestern 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 NorthWestern are associated (or correlated) with Antero Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Midstream Partners has no effect on the direction of NorthWestern i.e., NorthWestern and Antero Midstream go up and down completely randomly.
Pair Corralation between NorthWestern and Antero Midstream
Considering the 90-day investment horizon NorthWestern is expected to generate 1.71 times less return on investment than Antero Midstream. But when comparing it to its historical volatility, NorthWestern is 1.24 times less risky than Antero Midstream. It trades about 0.12 of its potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,488 in Antero Midstream Partners on August 28, 2024 and sell it today you would earn a total of 80.00 from holding Antero Midstream Partners or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorthWestern vs. Antero Midstream Partners
Performance |
| Timeline |
| NorthWestern |
| Antero Midstream Partners |
NorthWestern and Antero Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorthWestern and Antero Midstream
The main advantage of trading using opposite NorthWestern and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorthWestern position performs unexpectedly, Antero 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 Antero Midstream will offset losses from the drop in Antero Midstream's long position.| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Avista |
| Antero Midstream vs. EnLink Midstream LLC | Antero Midstream vs. Western Midstream Partners | Antero Midstream vs. Plains GP Holdings | Antero Midstream vs. Plains All American |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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