Correlation Between Antero Resources and American Express

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

Diversification Opportunities for Antero Resources and American Express

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Antero and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Antero Resources i.e., Antero Resources and American Express go up and down completely randomly.

Pair Corralation between Antero Resources and American Express

Allowing for the 90-day total investment horizon Antero Resources Corp is expected to generate 1.89 times more return on investment than American Express. However, Antero Resources is 1.89 times more volatile than American Express. It trades about 0.13 of its potential returns per unit of risk. American Express is currently generating about 0.06 per unit of risk. If you would invest  362.00  in Antero Resources Corp on May 12, 2022 and sell it today you would earn a total of  3,430  from holding Antero Resources Corp or generate 947.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Antero Resources Corp  vs.  American Express

 Performance (%) 
       Timeline  
Antero Resources Corp 
Antero Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Antero Price Channel

American Express 
American Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, American Express may actually be approaching a critical reversion point that can send shares even higher in September 2022.

American Price Channel

Antero Resources and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Antero Resources and American Express

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

Antero Resources Corp

Pair trading matchups for Antero Resources

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Antero Resources as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Antero Resources' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Antero Resources' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Antero Resources Corp.
The idea behind Antero Resources Corp and American Express 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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