Correlation Between Antero Midstream and Global Lights

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

Diversification Opportunities for Antero Midstream and Global Lights

0.38

Correlation Coefficient

Antero Midstream  Global Lights

Weak diversification

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

Pair Corralation between Antero Midstream and Global Lights

If you would invest  1,515  in Antero Midstream Partners on October 26, 2024 and sell it today you would earn a total of  131.50  from holding Antero Midstream Partners or generate 8.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Antero Midstream Partners  vs.  Global Lights Acquisition

Antero Midstream Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Antero Midstream may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global Lights Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Lights Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Global Lights is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Antero Midstream and Global Lights

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

The idea behind Antero Midstream Partners and Global Lights Acquisition 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.