Correlation Between Antero Midstream and Eastern

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

Diversification Opportunities for Antero Midstream and Eastern

-0.38

Correlation Coefficient

Antero Midstream  Eastern

Very good diversification

The 3 months correlation between Antero and Eastern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Antero Midstream i.e., Antero Midstream and Eastern go up and down completely randomly.

Pair Corralation between Antero Midstream and Eastern

Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.64 times more return on investment than Eastern. However, Antero Midstream Partners is 1.57 times less risky than Eastern. It trades about 0.02 of its potential returns per unit of risk. Eastern Co is currently generating about -0.15 per unit of risk. If you would invest  1,534  in Antero Midstream Partners on October 13, 2024 and sell it today you would earn a total of  13.00  from holding Antero Midstream Partners or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Antero Midstream Partners  vs.  Eastern Co

Antero Midstream Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Antero Midstream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co 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 primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Antero Midstream and Eastern

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

The idea behind Antero Midstream Partners and Eastern Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.