Correlation Between Antero Midstream and GENERAL

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

Diversification Opportunities for Antero Midstream and GENERAL

0.21

Correlation Coefficient

Antero Midstream  GENERAL

Modest diversification

The 3 months correlation between Antero and GENERAL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and GENERAL ELEC CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GENERAL ELEC CAP 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 GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GENERAL ELEC CAP has no effect on the direction of Antero Midstream i.e., Antero Midstream and GENERAL go up and down completely randomly.

Pair Corralation between Antero Midstream and GENERAL

Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 4.55 times more return on investment than GENERAL. However, Antero Midstream is 4.55 times more volatile than GENERAL ELEC CAP. It trades about 0.13 of its potential returns per unit of risk. GENERAL ELEC CAP is currently generating about 0.58 per unit of risk. If you would invest  1,502  in Antero Midstream Partners on October 11, 2024 and sell it today you would earn a total of  62.00  from holding Antero Midstream Partners or generate 4.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	14.29%
Values	Daily Returns

Antero Midstream Partners  vs.  GENERAL ELEC CAP

Antero Midstream Partners

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 2 (%) 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.

GENERAL ELEC CAP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GENERAL ELEC CAP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, GENERAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Antero Midstream and GENERAL

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

The idea behind Antero Midstream Partners and GENERAL ELEC CAP 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.