Correlation Between Suburban Propane and Antero Midstream

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

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

Diversification Opportunities for Suburban Propane and Antero Midstream

0.59

Correlation Coefficient

Suburban Propane  Antero Midstream

Very weak diversification

The 3 months correlation between Suburban and Antero is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners 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 Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Antero Midstream go up and down completely randomly.

Pair Corralation between Suburban Propane and Antero Midstream

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 1.23 times more return on investment than Antero Midstream. However, Suburban Propane is 1.23 times more volatile than Antero Midstream Partners. It trades about 0.13 of its potential returns per unit of risk. Antero Midstream Partners is currently generating about 0.09 per unit of risk. If you would invest  1,710  in Suburban Propane Partners on September 5, 2024 and sell it today you would earn a total of  257.00  from holding Suburban Propane Partners or generate 15.03% return on investment over 90 days.

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

Suburban Propane Partners  vs.  Antero Midstream Partners

Suburban Propane Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Antero Midstream Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Midstream Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Antero Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Suburban Propane and Antero Midstream

The main advantage of trading using opposite Suburban Propane and Antero Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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 Suburban Propane Partners 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.