Correlation Between Algonquin Pwr and Atmos Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Algonquin Pwr 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 Algonquin Pwr and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Pwr Util and Atmos Energy Corp, you can compare the effects of market volatilities on Algonquin Pwr 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 Algonquin Pwr with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Pwr and Atmos Energy.

Diversification Opportunities for Algonquin Pwr and Atmos Energy

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Algonquin and Atmos is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Pwr Util and Atmos Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy Corp and Algonquin Pwr 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 Algonquin Pwr Util 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 Corp has no effect on the direction of Algonquin Pwr i.e., Algonquin Pwr and Atmos Energy go up and down completely randomly.

Pair Corralation between Algonquin Pwr and Atmos Energy

Considering the 90-day investment horizon Algonquin Pwr Util is expected to under-perform the Atmos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Pwr Util is 1.01 times less risky than Atmos Energy. The stock trades about -0.63 of its potential returns per unit of risk. The Atmos Energy Corp is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  11,455  in Atmos Energy Corp on July 4, 2022 and sell it today you would lose (1,270)  from holding Atmos Energy Corp or give up 11.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Algonquin Pwr Util  vs.  Atmos Energy Corp

 Performance (%) 
       Timeline  
Algonquin Pwr Util 
Algonquin Performance
0 of 100
Over the last 90 days Algonquin Pwr Util has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in November 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Algonquin Price Channel

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

Algonquin Pwr and Atmos Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Algonquin Pwr and Atmos Energy

The main advantage of trading using opposite Algonquin Pwr and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Pwr 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.
Algonquin Pwr vs. Rumble Inc
The idea behind Algonquin Pwr Util and Atmos Energy 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.
Atmos Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

CEO Directory
Screen CEOs from public companies around the world
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go