Correlation Between Antero Midstream and IPG Photonics
Can any of the company-specific risk be diversified away by investing in both Antero Midstream and IPG Photonics 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 Midstream and IPG Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antero Midstream Partners and IPG Photonics, you can compare the effects of market volatilities on Antero Midstream and IPG Photonics 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 Midstream with a short position of IPG Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antero Midstream and IPG Photonics.
Diversification Opportunities for Antero Midstream and IPG Photonics
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Antero and IPG is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Antero Midstream Partners and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics and Antero Midstream 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 Midstream Partners are associated (or correlated) with IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of Antero Midstream i.e., Antero Midstream and IPG Photonics go up and down completely randomly.
Pair Corralation between Antero Midstream and IPG Photonics
Allowing for the 90-day total investment horizon Antero Midstream Partners is expected to generate 0.8 times more return on investment than IPG Photonics. However, Antero Midstream Partners is 1.25 times less risky than IPG Photonics. It trades about -0.06 of its potential returns per unit of risk. IPG Photonics is currently generating about -0.06 per unit of risk. If you would invest 1,568 in Antero Midstream Partners on September 25, 2024 and sell it today you would lose (39.00) from holding Antero Midstream Partners or give up 2.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Antero Midstream Partners vs. IPG Photonics
Performance |
Timeline |
Antero Midstream Partners |
IPG Photonics |
Antero Midstream and IPG Photonics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Antero Midstream and IPG Photonics
The main advantage of trading using opposite Antero Midstream and IPG Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Midstream position performs unexpectedly, IPG Photonics 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 IPG Photonics will offset losses from the drop in IPG Photonics' long position.Antero Midstream vs. EnLink Midstream LLC | Antero Midstream vs. Western Midstream Partners | Antero Midstream vs. Plains GP Holdings | Antero Midstream vs. Plains All American |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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