Correlation Between Antero Midstream and Euronav NV

Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Euronav NV 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 Euronav NV 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 Euronav NV, you can compare the effects of market volatilities on Antero Midstream and Euronav NV 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 Euronav NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Euronav NV.

Diversification Opportunities for Antero Midstream and Euronav NV

-0.61

Correlation Coefficient

Antero Midstream  Euronav NV

Excellent diversification

The 3 months correlation between Antero and Euronav is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Euronav NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronav NV 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 Euronav NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronav NV has no effect on the direction of Antero Midstream i.e., Antero Midstream and Euronav NV go up and down completely randomly.

Pair Corralation between Antero Midstream and Euronav NV

Allowing for the 90-day total investment horizon Antero Midstream is expected to generate 1.43 times less return on investment than Euronav NV. But when comparing it to its historical volatility, Antero Midstream Partners is 1.66 times less risky than Euronav NV. It trades about 0.06 of its potential returns per unit of risk. Euronav NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  959.00  in Euronav NV on January 19, 2024 and sell it today you would earn a total of  678.00  from holding Euronav NV or generate 70.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Antero Midstream Partners  vs.  Euronav NV

Antero Midstream Partners

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Antero Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Euronav NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euronav NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Euronav NV is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Antero Midstream and Euronav NV

The main advantage of trading using opposite Antero Midstream and Euronav NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Euronav NV 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 Euronav NV will offset losses from the drop in Euronav NV's long position.

The idea behind Antero Midstream Partners and Euronav NV 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.