Correlation Between Terra Firma and Antero Midstream

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

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

Diversification Opportunities for Terra Firma and Antero Midstream

0.0

Correlation Coefficient

Terra Firma  Antero Midstream

Pay attention - limited upside

The 3 months correlation between Terra and Antero is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Terra Firma Capital 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 Terra Firma 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 Terra Firma Capital 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 Terra Firma i.e., Terra Firma and Antero Midstream go up and down completely randomly.

Pair Corralation between Terra Firma and Antero Midstream

If you would invest  1,402  in Antero Midstream Partners on December 18, 2024 and sell it today you would earn a total of  341.00  from holding Antero Midstream Partners or generate 24.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Terra Firma Capital  vs.  Antero Midstream Partners

Terra Firma Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terra Firma Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Terra Firma is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Antero Midstream Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Antero Midstream displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terra Firma and Antero Midstream

The main advantage of trading using opposite Terra Firma and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terra Firma 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 Terra Firma Capital 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.