Correlation Between Navigator Holdings and Antero Midstream

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

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

Diversification Opportunities for Navigator Holdings and Antero Midstream

-0.48

Correlation Coefficient

Navigator Holdings  Antero Midstream

Very good diversification

The 3 months correlation between Navigator and Antero is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings 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 Navigator Holdings 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 Navigator Holdings 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 Navigator Holdings i.e., Navigator Holdings and Antero Midstream go up and down completely randomly.

Pair Corralation between Navigator Holdings and Antero Midstream

Given the investment horizon of 90 days Navigator Holdings is expected to under-perform the Antero Midstream. In addition to that, Navigator Holdings is 1.29 times more volatile than Antero Midstream Partners. It trades about -0.05 of its total potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.11 per unit of volatility. If you would invest  1,393  in Antero Midstream Partners on January 29, 2024 and sell it today you would earn a total of  26.00  from holding Antero Midstream Partners or generate 1.87% return on investment over 90 days.

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

Navigator Holdings  vs.  Antero Midstream Partners

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Navigator Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Antero Midstream Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 15 (%) 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 Navigator Holdings and Antero Midstream

The main advantage of trading using opposite Navigator Holdings and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Holdings 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 Navigator Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.