Correlation Between Atmos Energy and Centerpoint Energy

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Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Centerpoint 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 Atmos Energy and Centerpoint Energy 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 Centerpoint Energy, you can compare the effects of market volatilities on Atmos Energy and Centerpoint 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 Atmos Energy with a short position of Centerpoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Centerpoint Energy.

Diversification Opportunities for Atmos Energy and Centerpoint Energy

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Atmos and Centerpoint is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy Corp and Centerpoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerpoint Energy 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 Centerpoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerpoint Energy has no effect on the direction of Atmos Energy i.e., Atmos Energy and Centerpoint Energy go up and down completely randomly.

Pair Corralation between Atmos Energy and Centerpoint Energy

Considering the 90-day investment horizon Atmos Energy is expected to generate 1.72 times less return on investment than Centerpoint Energy. But when comparing it to its historical volatility, Atmos Energy Corp is 1.08 times less risky than Centerpoint Energy. It trades about 0.03 of its potential returns per unit of risk. Centerpoint Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,283  in Centerpoint Energy on July 1, 2022 and sell it today you would earn a total of  732.00  from holding Centerpoint Energy or generate 32.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Atmos Energy Corp  vs.  Centerpoint Energy

 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 quite persistent basic indicators, Atmos Energy is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Atmos Price Channel

Centerpoint Energy 
Centerpoint Performance
0 of 100
Over the last 90 days Centerpoint Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Centerpoint Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the insiders.

Centerpoint Price Channel

Atmos Energy and Centerpoint Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atmos Energy and Centerpoint Energy

The main advantage of trading using opposite Atmos Energy and Centerpoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Centerpoint 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 Centerpoint Energy will offset losses from the drop in Centerpoint Energy's long position.
Atmos Energy vs. Rumble Inc
The idea behind Atmos Energy Corp and Centerpoint 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.
Centerpoint Energy vs. Johnson Johnson
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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