Correlation Between SOUTHERN and Antero Midstream

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

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

Diversification Opportunities for SOUTHERN and Antero Midstream

0.34

Correlation Coefficient

SOUTHERN  Antero Midstream

Weak diversification

The 3 months correlation between SOUTHERN and Antero is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHERN PER 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 SOUTHERN 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 SOUTHERN PER 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 SOUTHERN i.e., SOUTHERN and Antero Midstream go up and down completely randomly.

Pair Corralation between SOUTHERN and Antero Midstream

Assuming the 90 days trading horizon SOUTHERN PER CORP is expected to under-perform the Antero Midstream. But the bond apears to be less risky and, when comparing its historical volatility, SOUTHERN PER CORP is 5.88 times less risky than Antero Midstream. The bond trades about -0.07 of its potential returns per unit of risk. The Antero Midstream Partners is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,494  in Antero Midstream Partners on September 23, 2024 and sell it today you would earn a total of  7.00  from holding Antero Midstream Partners or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

SOUTHERN PER CORP  vs.  Antero Midstream Partners

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Antero Midstream Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SOUTHERN and Antero Midstream

The main advantage of trading using opposite SOUTHERN and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHERN 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 SOUTHERN PER 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.