Correlation Between DT Midstream and Antero Midstream

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

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

Diversification Opportunities for DT Midstream and Antero Midstream

0.25

Correlation Coefficient

DT Midstream  Antero Midstream

Modest diversification

The 3 months correlation between DTM and Antero is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DT Midstream 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 DT 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 DT Midstream 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 DT Midstream i.e., DT Midstream and Antero Midstream go up and down completely randomly.

Pair Corralation between DT Midstream and Antero Midstream

Considering the 90-day investment horizon DT Midstream is expected to under-perform the Antero Midstream. In addition to that, DT Midstream is 1.33 times more volatile than Antero Midstream Partners. It trades about -0.04 of its total potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.1 per unit of volatility. If you would invest  1,526  in Antero Midstream Partners on December 3, 2024 and sell it today you would earn a total of  154.00  from holding Antero Midstream Partners or generate 10.09% return on investment over 90 days.

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

DT Midstream  vs.  Antero Midstream Partners

DT Midstream

Risk-Adjusted Performance

Very Weak

Over the last 90 days DT Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, DT Midstream is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Antero Midstream Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 7 (%) 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 April 2025.

Pair Trading with DT Midstream and Antero Midstream

The main advantage of trading using opposite DT Midstream and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DT Midstream 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 DT Midstream 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.