Correlation Between Antero Midstream and PEPSICO

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

Diversification Opportunities for Antero Midstream and PEPSICO

0.24

Correlation Coefficient

Antero Midstream  PEPSICO

Modest diversification

The 3 months correlation between Antero and PEPSICO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and PEPSICO INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 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 PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC has no effect on the direction of Antero Midstream i.e., Antero Midstream and PEPSICO go up and down completely randomly.

Pair Corralation between Antero Midstream and PEPSICO

Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 4.05 times more return on investment than PEPSICO. However, Antero Midstream is 4.05 times more volatile than PEPSICO INC. It trades about 0.12 of its potential returns per unit of risk. PEPSICO INC is currently generating about -0.22 per unit of risk. If you would invest  1,499  in Antero Midstream Partners on October 9, 2024 and sell it today you would earn a total of  51.00  from holding Antero Midstream Partners or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Antero Midstream Partners  vs.  PEPSICO INC

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.

PEPSICO INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Antero Midstream and PEPSICO

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

The idea behind Antero Midstream Partners and PEPSICO INC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.