Correlation Between Antero Midstream and JD Sports

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

Diversification Opportunities for Antero Midstream and JD Sports

-0.74

Correlation Coefficient

Antero Midstream  JD Sports

Pay attention - limited upside

The 3 months correlation between Antero and JDDSF is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Antero Midstream i.e., Antero Midstream and JD Sports go up and down completely randomly.

Pair Corralation between Antero Midstream and JD Sports

Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.6 times more return on investment than JD Sports. However, Antero Midstream Partners is 1.66 times less risky than JD Sports. It trades about 0.19 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.17 per unit of risk. If you would invest  1,490  in Antero Midstream Partners on December 27, 2024 and sell it today you would earn a total of  300.50  from holding Antero Midstream Partners or generate 20.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Antero Midstream Partners  vs.  JD Sports Fashion

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 conflicting primary indicators, Antero Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting 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 JD Sports

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

The idea behind Antero Midstream Partners and JD Sports Fashion 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.