Correlation Between Expand Energy and Antero Resources

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

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

Diversification Opportunities for Expand Energy and Antero Resources

0.72

Correlation Coefficient

Expand Energy  Antero Resources

Poor diversification

The 3 months correlation between Expand and Antero is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources Corp and Expand Energy 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 Expand Energy are associated (or correlated) with Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Expand Energy i.e., Expand Energy and Antero Resources go up and down completely randomly.

Pair Corralation between Expand Energy and Antero Resources

Assuming the 90 days horizon Expand Energy is expected to generate 0.8 times more return on investment than Antero Resources. However, Expand Energy is 1.25 times less risky than Antero Resources. It trades about -0.02 of its potential returns per unit of risk. Antero Resources Corp is currently generating about -0.09 per unit of risk. If you would invest  8,948  in Expand Energy on September 20, 2024 and sell it today you would lose (103.00) from holding Expand Energy or give up 1.15% of portfolio value over 90 days.

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

Expand Energy  vs.  Antero Resources Corp

Expand Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Expand Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Antero Resources Corp

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expand Energy and Antero Resources

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

The idea behind Expand Energy and Antero Resources Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.