Correlation Between Antero Resources and Peabody Energy

Can any of the company-specific risk be diversified away by investing in both Antero Resources and Peabody 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 Peabody 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 Peabody Energy Corp, you can compare the effects of market volatilities on Antero Resources and Peabody 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 Peabody Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and Peabody Energy.

Diversification Opportunities for Antero Resources and Peabody Energy

-0.69

Correlation Coefficient

Antero Resources  Peabody Energy

Excellent diversification

The 3 months correlation between Antero and Peabody is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Peabody Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy Corp 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 Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy Corp has no effect on the direction of Antero Resources i.e., Antero Resources and Peabody Energy go up and down completely randomly.

Pair Corralation between Antero Resources and Peabody Energy

Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 1.23 times more return on investment than Peabody Energy. However, Antero Resources is 1.23 times more volatile than Peabody Energy Corp. It trades about 0.36 of its potential returns per unit of risk. Peabody Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  2,939  in Antero Resources Corp on January 30, 2024 and sell it today you would earn a total of  441.00  from holding Antero Resources Corp or generate 15.01% return on investment over 90 days.

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

Antero Resources Corp  vs.  Peabody Energy Corp

Antero Resources Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Peabody Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peabody Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Antero Resources and Peabody Energy

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

The idea behind Antero Resources Corp and Peabody Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.