Correlation Between Antero Midstream and Dynagas LNG

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

Diversification Opportunities for Antero Midstream and Dynagas LNG

-0.73

Correlation Coefficient

Antero Midstream  Dynagas LNG

Pay attention - limited upside

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

Pair Corralation between Antero Midstream and Dynagas LNG

Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.78 times more return on investment than Dynagas LNG. However, Antero Midstream Partners is 1.28 times less risky than Dynagas LNG. It trades about 0.19 of its potential returns per unit of risk. Dynagas LNG Partners is currently generating about -0.24 per unit of risk. If you would invest  1,493  in Antero Midstream Partners on December 28, 2024 and sell it today you would earn a total of  301.00  from holding Antero Midstream Partners or generate 20.16% 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.  Dynagas LNG Partners

Antero Midstream Partners

Risk-Adjusted Performance

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.

Dynagas LNG Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynagas LNG Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Antero Midstream and Dynagas LNG

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

The idea behind Antero Midstream Partners and Dynagas LNG 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 Commodity Directory module to find actively traded commodities issued by global exchanges.