Correlation Between Antero Resources and NACCO Industries
Can any of the company-specific risk be diversified away by investing in both Antero Resources and NACCO Industries 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 NACCO Industries 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 NACCO Industries, you can compare the effects of market volatilities on Antero Resources and NACCO Industries 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 NACCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Resources and NACCO Industries.
Diversification Opportunities for Antero Resources and NACCO Industries
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Antero and NACCO is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and NACCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NACCO Industries 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 NACCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NACCO Industries has no effect on the direction of Antero Resources i.e., Antero Resources and NACCO Industries go up and down completely randomly.
Pair Corralation between Antero Resources and NACCO Industries
Allowing for the 90-day total investment horizon Antero Resources is expected to generate 1.16 times less return on investment than NACCO Industries. But when comparing it to its historical volatility, Antero Resources Corp is 1.73 times less risky than NACCO Industries. It trades about 0.28 of its potential returns per unit of risk. NACCO Industries is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,899 in NACCO Industries on February 5, 2024 and sell it today you would earn a total of 423.00 from holding NACCO Industries or generate 14.59% 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. NACCO Industries
Performance |
Timeline |
Antero Resources Corp |
NACCO Industries |
Antero Resources and NACCO Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Antero Resources and NACCO Industries
The main advantage of trading using opposite Antero Resources and NACCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, NACCO Industries 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 NACCO Industries will offset losses from the drop in NACCO Industries' long position.Antero Resources vs. Southwestern Energy | Antero Resources vs. Chesapeake Energy Corp | Antero Resources vs. EQT Corporation | Antero Resources vs. Matador Resources |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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