Correlation Between Antero Resources and Cummins
Can any of the company-specific risk be diversified away by investing in both Antero Resources and Cummins 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 Cummins 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 Cummins, you can compare the effects of market volatilities on Antero Resources and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and Cummins.
Diversification Opportunities for Antero Resources and Cummins
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Antero and Cummins is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Antero Resources i.e., Antero Resources and Cummins go up and down completely randomly.
Pair Corralation between Antero Resources and Cummins
Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 2.23 times more return on investment than Cummins. However, Antero Resources is 2.23 times more volatile than Cummins. It trades about 0.39 of its potential returns per unit of risk. Cummins is currently generating about 0.01 per unit of risk. If you would invest 2,732 in Antero Resources Corp on January 26, 2024 and sell it today you would earn a total of 412.00 from holding Antero Resources Corp or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Antero Resources Corp vs. Cummins
Performance |
| Timeline |
| Antero Resources Corp |
| Cummins |
Antero Resources and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antero Resources and Cummins
The main advantage of trading using opposite Antero Resources and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Antero Resources vs. Southwestern Energy | Antero Resources vs. Chesapeake Energy Corp | Antero Resources vs. EQT Corporation | Antero Resources vs. Matador Resources |
| Cummins vs. Parker Hannifin | Cummins vs. Emerson Electric | Cummins vs. Smith AO | Cummins vs. Watts Water Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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