Correlation Between Dassault Systemes and Antero Midstream

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

By analyzing existing cross correlation between Dassault Systemes SE and Antero Midstream Partners, you can compare the effects of market volatilities on Dassault Systemes and Antero Midstream 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 Dassault Systemes with a short position of Antero Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Antero Midstream.

Diversification Opportunities for Dassault Systemes and Antero Midstream

-0.73

Correlation Coefficient

Dassault Systemes  Antero Midstream

Pay attention - limited upside

The 3 months correlation between Dassault and Antero is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Antero Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Midstream Partners and Dassault Systemes 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 Dassault Systemes SE are associated (or correlated) with Antero Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Midstream Partners has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Antero Midstream go up and down completely randomly.

Pair Corralation between Dassault Systemes and Antero Midstream

Assuming the 90 days trading horizon Dassault Systemes SE is expected to under-perform the Antero Midstream. In addition to that, Dassault Systemes is 1.03 times more volatile than Antero Midstream Partners. It trades about -0.38 of its total potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.1 per unit of volatility. If you would invest  1,341  in Antero Midstream Partners on January 16, 2024 and sell it today you would earn a total of  25.00  from holding Antero Midstream Partners or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Dassault Systemes SE  vs.  Antero Midstream Partners

Dassault Systemes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systemes SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Dassault Systemes and Antero Midstream

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

The idea behind Dassault Systemes SE and Antero Midstream Partners 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.