Correlation Between Antero Resources and BKV

Can any of the company-specific risk be diversified away by investing in both Antero Resources and BKV 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 Resources and BKV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Antero Resources Corp and BKV Corporation, you can compare the effects of market volatilities on Antero Resources and BKV 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 Resources with a short position of BKV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and BKV.

Diversification Opportunities for Antero Resources and BKV

0.75

Correlation Coefficient

Antero Resources  BKV

Poor diversification

The 3 months correlation between Antero and BKV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation and Antero Resources 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 Resources Corp are associated (or correlated) with BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Antero Resources i.e., Antero Resources and BKV go up and down completely randomly.

Pair Corralation between Antero Resources and BKV

Allowing for the 90-day total investment horizon Antero Resources Corp is expected to under-perform the BKV. But the stock apears to be less risky and, when comparing its historical volatility, Antero Resources Corp is 1.02 times less risky than BKV. The stock trades about -0.18 of its potential returns per unit of risk. The BKV Corporation is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,154  in BKV Corporation on September 22, 2024 and sell it today you would earn a total of  15.00  from holding BKV Corporation or generate 0.7% return on investment over 90 days.

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

Antero Resources Corp  vs.  BKV Corp.

Antero Resources Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Antero Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BKV Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Antero Resources and BKV

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

The idea behind Antero Resources Corp and BKV Corporation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.