Correlation Between Apple and Atmos Energy

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

Diversification Opportunities for Apple and Atmos Energy

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apple and Atmos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Apple 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 Apple Inc are associated (or correlated) with Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Apple i.e., Apple and Atmos Energy go up and down completely randomly.

Pair Corralation between Apple and Atmos Energy

Given the investment horizon of 90 days Apple Inc is expected to generate 1.4 times more return on investment than Atmos Energy. However, Apple is 1.4 times more volatile than Atmos Energy. It trades about 0.03 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.04 per unit of risk. If you would invest  12,096  in Apple Inc on September 2, 2022 and sell it today you would earn a total of  2,735  from holding Apple Inc or generate 22.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Atmos Energy

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

Atmos Energy 
Atmos Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atmos Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Atmos Price Channel

Apple and Atmos Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Atmos Energy

The main advantage of trading using opposite Apple and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.
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The idea behind Apple Inc and Atmos Energy 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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