Correlation Between Antero Resources and BKV

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

Diversification Opportunities for Antero Resources and BKV

0.36

Correlation Coefficient

Antero Resources  BKV

Weak diversification

The 3 months correlation between Antero and BKV is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of Antero Resources i.e., Antero Resources and BKV go up and down completely randomly.

Pair Corralation between Antero Resources and BKV

Allowing for the 90-day total investment horizon Antero Resources is expected to generate 1.03 times less return on investment than BKV. In addition to that, Antero Resources is 1.63 times more volatile than BKV Corporation. It trades about 0.14 of its total potential returns per unit of risk. BKV Corporation is currently generating about 0.23 per unit of volatility. If you would invest  1,800  in BKV Corporation on September 12, 2024 and sell it today you would earn a total of  394.00  from holding BKV Corporation or generate 21.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.38%
Values	Daily Returns

Antero Resources Corp  vs.  BKV Corp.

Antero Resources Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 10 (%) 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.

BKV Corporation

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Antero Resources and BKV

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

The idea behind Antero Resources Corp and BKV Corporation 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.