Correlation Between Antero Resources and Carbon Energy

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

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

Diversification Opportunities for Antero Resources and Carbon Energy

0.75

Correlation Coefficient

Antero Resources  Carbon Energy

Poor diversification

The 3 months correlation between Antero and Carbon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Carbon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Energy and Antero Resources 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 Antero Resources Corp are associated (or correlated) with Carbon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Energy has no effect on the direction of Antero Resources i.e., Antero Resources and Carbon Energy go up and down completely randomly.

Pair Corralation between Antero Resources and Carbon Energy

If you would invest  2,997  in Antero Resources Corp on February 7, 2024 and sell it today you would earn a total of  317.00  from holding Antero Resources Corp or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	27.27%
Values	Daily Returns

Antero Resources Corp  vs.  Carbon Energy

Antero Resources Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Carbon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Antero Resources and Carbon Energy

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

The idea behind Antero Resources Corp and Carbon Energy 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.