Correlation Between Delek Energy and Antero Resources
Can any of the company-specific risk be diversified away by investing in both Delek Energy and Antero 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 Delek Energy and Antero Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Energy and Antero Resources Corp, you can compare the effects of market volatilities on Delek Energy and Antero 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 Delek Energy with a short position of Antero Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Antero Resources.
Diversification Opportunities for Delek Energy and Antero Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delek and Antero is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources Corp and Delek Energy 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 Delek Energy are associated (or correlated) with Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Delek Energy i.e., Delek Energy and Antero Resources go up and down completely randomly.
Pair Corralation between Delek Energy and Antero Resources
Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Antero Resources. But the stock apears to be less risky and, when comparing its historical volatility, Delek Energy is 1.1 times less risky than Antero Resources. The stock trades about -0.1 of its potential returns per unit of risk. The Antero Resources Corp is currently generating about 0.39 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Energy vs. Antero Resources Corp
Performance |
| Timeline |
| Delek Energy |
| Antero Resources Corp |
Delek Energy and Antero Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Energy and Antero Resources
The main advantage of trading using opposite Delek Energy and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Energy position performs unexpectedly, Antero 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 Antero Resources will offset losses from the drop in Antero Resources' long position.The idea behind Delek Energy and Antero Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Antero Resources vs. Southwestern Energy | Antero Resources vs. Chesapeake Energy Corp | Antero Resources vs. EQT Corporation | Antero Resources vs. Matador Resources |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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