Correlation Between Antero Midstream and Iris Energy

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

Diversification Opportunities for Antero Midstream and Iris Energy

-0.13

Correlation Coefficient

Antero Midstream  Iris Energy

Good diversification

The 3 months correlation between Antero and Iris is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Antero Midstream i.e., Antero Midstream and Iris Energy go up and down completely randomly.

Pair Corralation between Antero Midstream and Iris Energy

Allowing for the 90-day total investment horizon Antero Midstream is expected to generate 5.21 times less return on investment than Iris Energy. But when comparing it to its historical volatility, Antero Midstream Partners is 6.0 times less risky than Iris Energy. It trades about 0.09 of its potential returns per unit of risk. Iris Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Iris Energy on October 25, 2024 and sell it today you would earn a total of  1,003  from holding Iris Energy or generate 445.78% 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.  Iris Energy

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.

Iris Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iris Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Iris Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Antero Midstream and Iris Energy

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

The idea behind Antero Midstream Partners and Iris Energy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.