Correlation Between HF Sinclair and Antero Midstream

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

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

Diversification Opportunities for HF Sinclair and Antero Midstream

-0.07

Correlation Coefficient

HF Sinclair  Antero Midstream

Good diversification

The 3 months correlation between DINO and Antero is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Antero Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Midstream Partners and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with Antero Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Midstream Partners has no effect on the direction of HF Sinclair i.e., HF Sinclair and Antero Midstream go up and down completely randomly.

Pair Corralation between HF Sinclair and Antero Midstream

Given the investment horizon of 90 days HF Sinclair is expected to generate 1.39 times less return on investment than Antero Midstream. In addition to that, HF Sinclair is 1.66 times more volatile than Antero Midstream Partners. It trades about 0.18 of its total potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.42 per unit of volatility. If you would invest  1,515  in Antero Midstream Partners on October 26, 2024 and sell it today you would earn a total of  131.50  from holding Antero Midstream Partners or generate 8.68% return on investment over 90 days.

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

HF Sinclair Corp  vs.  Antero Midstream Partners

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Antero Midstream Partners

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Antero Midstream may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HF Sinclair and Antero Midstream

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

The idea behind HF Sinclair Corp and Antero Midstream Partners 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.