Correlation Between Evolution Petroleum and Antero Resources

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Can any of the company-specific risk be diversified away by investing in both Evolution Petroleum 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 Evolution Petroleum and Antero Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Petroleum Corp and Antero Resources Corp, you can compare the effects of market volatilities on Evolution Petroleum 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 Evolution Petroleum with a short position of Antero Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Petroleum and Antero Resources.

Diversification Opportunities for Evolution Petroleum and Antero Resources

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Evolution and Antero is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Petroleum Corp 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 Evolution Petroleum 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 Evolution Petroleum Corp 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 Evolution Petroleum i.e., Evolution Petroleum and Antero Resources go up and down completely randomly.

Pair Corralation between Evolution Petroleum and Antero Resources

Considering the 90-day investment horizon Evolution Petroleum Corp is expected to generate 1.63 times more return on investment than Antero Resources. However, Evolution Petroleum is 1.63 times more volatile than Antero Resources Corp. It trades about -0.09 of its potential returns per unit of risk. Antero Resources Corp is currently generating about -0.42 per unit of risk. If you would invest  750.00  in Evolution Petroleum Corp on June 28, 2022 and sell it today you would lose (109.00)  from holding Evolution Petroleum Corp or give up 14.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Evolution Petroleum Corp  vs.  Antero Resources Corp

 Performance (%) 
       Timeline  
Evolution Petroleum Corp 
Evolution Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Petroleum Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Evolution Petroleum revealed solid returns over the last few months and may actually be approaching a breakup point.

Evolution Price Channel

Antero Resources Corp 
Antero Performance
0 of 100
Over the last 90 days Antero Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Antero Price Channel

Evolution Petroleum and Antero Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Evolution Petroleum and Antero Resources

The main advantage of trading using opposite Evolution Petroleum and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Petroleum 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.
Evolution Petroleum vs. Clearwater Paper Corp
The idea behind Evolution Petroleum Corp 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.
Antero Resources vs. Clearwater Paper Corp
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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