Correlation Between Woodside Energy and Antero Resources

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Can any of the company-specific risk be diversified away by investing in both Woodside 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 Woodside 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 Woodside Energy Group and Antero Resources Corp, you can compare the effects of market volatilities on Woodside 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 Woodside Energy with a short position of Antero Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and Antero Resources.

Diversification Opportunities for Woodside Energy and Antero Resources

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Woodside and Antero is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group 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 Woodside 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 Woodside Energy Group 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 Woodside Energy i.e., Woodside Energy and Antero Resources go up and down completely randomly.

Pair Corralation between Woodside Energy and Antero Resources

Considering the 90-day investment horizon Woodside Energy is expected to generate 1.2 times less return on investment than Antero Resources. But when comparing it to its historical volatility, Woodside Energy Group is 1.53 times less risky than Antero Resources. It trades about 0.01 of its potential returns per unit of risk. Antero Resources Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,277  in Antero Resources Corp on December 30, 2023 and sell it today you would lose (377.00) from holding Antero Resources Corp or give up 11.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Woodside Energy Group  vs.  Antero Resources Corp

 Performance 
       Timeline  
Woodside Energy Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Woodside Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Antero Resources Corp 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Woodside Energy and Antero Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Woodside Energy and Antero Resources

The main advantage of trading using opposite Woodside Energy and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside 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 Woodside Energy Group 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.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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