Correlation Between Antero Midstream and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Cheniere Energy 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 Cheniere Energy 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 Cheniere Energy Partners, you can compare the effects of market volatilities on Antero Midstream and Cheniere Energy 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Cheniere Energy.
Diversification Opportunities for Antero Midstream and Cheniere Energy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Antero and Cheniere is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Antero Midstream i.e., Antero Midstream and Cheniere Energy go up and down completely randomly.
Pair Corralation between Antero Midstream and Cheniere Energy
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.56 times more return on investment than Cheniere Energy. However, Antero Midstream Partners is 1.79 times less risky than Cheniere Energy. It trades about 0.19 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about -0.05 per unit of risk. If you would invest 1,357 in Antero Midstream Partners on January 26, 2024 and sell it today you would earn a total of 45.00 from holding Antero Midstream Partners or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Antero Midstream Partners vs. Cheniere Energy Partners
Performance |
| Timeline |
| Antero Midstream Partners |
| Cheniere Energy Partners |
Antero Midstream and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Midstream and Cheniere Energy
The main advantage of trading using opposite Antero Midstream and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy'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 |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. NuStar Energy LP | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Western Midstream Partners |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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