Correlation Between Antero Resources and State Street

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

Diversification Opportunities for Antero Resources and State Street

0.53

Correlation Coefficient

Antero Resources  State Street

Very weak diversification

The 3 months correlation between Antero and State is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Antero Resources i.e., Antero Resources and State Street go up and down completely randomly.

Pair Corralation between Antero Resources and State Street

Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 4.16 times more return on investment than State Street. However, Antero Resources is 4.16 times more volatile than State Street Target. It trades about 0.39 of its potential returns per unit of risk. State Street Target is currently generating about -0.19 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	Weak
Accuracy	95.45%
Values	Daily Returns

Antero Resources Corp  vs.  State Street Target

Antero Resources Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

State Street Target

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Target are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Antero Resources and State Street

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

The idea behind Antero Resources Corp and State Street Target 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.