Correlation Between Antero Midstream and Flex Lng

By analyzing existing cross correlation between Antero Midstream Corp and Flex Lng, you can compare the effects of market volatilities on Antero Midstream and Flex Lng 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 Flex Lng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and Flex Lng.

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Can any of the company-specific risk be diversified away by investing in both Antero Midstream and Flex Lng 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 Flex Lng into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Antero Midstream and Flex Lng

0.19
  Correlation Coefficient
Antero Midstream Corp
Flex Lng

Average diversification

The 3 months correlation between Antero and Flex Lng is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Corp and Flex Lng in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Flex Lng 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 Corp are associated (or correlated) with Flex Lng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex Lng has no effect on the direction of Antero Midstream i.e., Antero Midstream and Flex Lng go up and down completely randomly.

Pair Corralation between Antero Midstream and Flex Lng

Allowing for the 90-day total investment horizon Antero Midstream is expected to generate 13.68 times less return on investment than Flex Lng. But when comparing it to its historical volatility, Antero Midstream Corp is 1.2 times less risky than Flex Lng. It trades about 0.02 of its potential returns per unit of risk. Flex Lng is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,366  in Flex Lng on June 21, 2021 and sell it today you would earn a total of  330.00  from holding Flex Lng or generate 24.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Antero Midstream Corp  vs.  Flex Lng

 Performance (%) 
      Timeline 
Antero Midstream Corp 
 Antero Performance
0 of 100
Over the last 90 days Antero Midstream Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady primary indicators, Antero Midstream is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Antero Price Channel

Flex Lng 
 Flex Lng Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Flex Lng are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish basic indicators, Flex Lng exhibited solid returns over the last few months and may actually be approaching a breakup point.

Flex Lng Price Channel

Antero Midstream and Flex Lng Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Antero Midstream and Flex Lng

The main advantage of trading using opposite Antero Midstream and Flex Lng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, Flex Lng 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 Flex Lng will offset losses from the drop in Flex Lng's long position.
The idea behind Antero Midstream Corp and Flex Lng 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.
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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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