Correlation Between Civitas Resources and Antero Resources

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

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

Diversification Opportunities for Civitas Resources and Antero Resources

-0.1

Correlation Coefficient

Civitas Resources  Antero Resources

Good diversification

The 3 months correlation between Civitas and Antero is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources Corp and Civitas 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 Civitas Resources are associated (or correlated) with Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Civitas Resources i.e., Civitas Resources and Antero Resources go up and down completely randomly.

Pair Corralation between Civitas Resources and Antero Resources

Given the investment horizon of 90 days Civitas Resources is expected to under-perform the Antero Resources. But the stock apears to be less risky and, when comparing its historical volatility, Civitas Resources is 1.26 times less risky than Antero Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Antero Resources Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,657  in Antero Resources Corp on September 12, 2024 and sell it today you would earn a total of  448.00  from holding Antero Resources Corp or generate 16.86% return on investment over 90 days.

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

Civitas Resources  vs.  Antero Resources Corp

Civitas Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civitas Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Antero Resources Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 8 (%) 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.

Pair Trading with Civitas Resources and Antero Resources

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

The idea behind Civitas Resources and Antero Resources 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 CEOs Directory module to screen CEOs from public companies around the world.