Correlation Between Atmos Energy and Chesapeake Utilities

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

Diversification Opportunities for Atmos Energy and Chesapeake Utilities

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Atmos and Chesapeake is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy Corp and Chesapeake Utilities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities Corp and Atmos 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 Atmos Energy Corp are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities Corp has no effect on the direction of Atmos Energy i.e., Atmos Energy and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between Atmos Energy and Chesapeake Utilities

Considering the 90-day investment horizon Atmos Energy Corp is expected to generate 0.84 times more return on investment than Chesapeake Utilities. However, Atmos Energy Corp is 1.19 times less risky than Chesapeake Utilities. It trades about -0.05 of its potential returns per unit of risk. Chesapeake Utilities Corp is currently generating about -0.07 per unit of risk. If you would invest  11,239  in Atmos Energy Corp on July 9, 2022 and sell it today you would lose (1,158)  from holding Atmos Energy Corp or give up 10.3% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Atmos Energy Corp  vs.  Chesapeake Utilities Corp

 Performance (%) 
       Timeline  
Atmos Energy Corp 
Atmos Performance
0 of 100
Over the last 90 days Atmos Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Atmos Price Channel

Chesapeake Utilities Corp 
Chesapeake Performance
0 of 100
Over the last 90 days Chesapeake Utilities Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish 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.

Chesapeake Price Channel

Atmos Energy and Chesapeake Utilities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atmos Energy and Chesapeake Utilities

The main advantage of trading using opposite Atmos Energy and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.
Atmos Energy vs. Rumble Inc
The idea behind Atmos Energy Corp and Chesapeake Utilities 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.
Chesapeake Utilities vs. Rumble Inc
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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