Correlation Between Vaalco Energy and Antero Resources

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

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

Diversification Opportunities for Vaalco Energy and Antero Resources

-0.47

Correlation Coefficient

Vaalco Energy  Antero Resources

Very good diversification

The 3 months correlation between Vaalco and Antero is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy 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 Vaalco Energy 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 Vaalco Energy 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 Vaalco Energy i.e., Vaalco Energy and Antero Resources go up and down completely randomly.

Pair Corralation between Vaalco Energy and Antero Resources

Considering the 90-day investment horizon Vaalco Energy is expected to under-perform the Antero Resources. But the stock apears to be less risky and, when comparing its historical volatility, Vaalco Energy is 1.2 times less risky than Antero Resources. The stock trades about -0.09 of its potential returns per unit of risk. The Antero Resources Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,668  in Antero Resources Corp on September 14, 2024 and sell it today you would earn a total of  611.00  from holding Antero Resources Corp or generate 22.9% return on investment over 90 days.

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

Vaalco Energy  vs.  Antero Resources Corp

Vaalco Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaalco Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Vaalco Energy and Antero Resources

The main advantage of trading using opposite Vaalco Energy and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaalco Energy 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 Vaalco Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.