Correlation Between Antero Resources and Matador Resources

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

Diversification Opportunities for Antero Resources and Matador Resources

0.34

Correlation Coefficient

Antero Resources  Matador Resources

Weak diversification

The 3 months correlation between Antero and Matador is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Matador Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Resources 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 Matador Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Resources has no effect on the direction of Antero Resources i.e., Antero Resources and Matador Resources go up and down completely randomly.

Pair Corralation between Antero Resources and Matador Resources

Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 1.07 times more return on investment than Matador Resources. However, Antero Resources is 1.07 times more volatile than Matador Resources. It trades about 0.08 of its potential returns per unit of risk. Matador Resources is currently generating about -0.05 per unit of risk. If you would invest  3,552  in Antero Resources Corp on December 28, 2024 and sell it today you would earn a total of  417.00  from holding Antero Resources Corp or generate 11.74% return on investment over 90 days.

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

Antero Resources Corp  vs.  Matador Resources

Antero Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Matador Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matador Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Antero Resources and Matador Resources

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

The idea behind Antero Resources Corp and Matador Resources 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .