Correlation Between Atmos Energy and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Darden Restaurants 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 Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Darden Restaurants, you can compare the effects of market volatilities on Atmos Energy and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Darden Restaurants.
Diversification Opportunities for Atmos Energy and Darden Restaurants
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Atmos and Darden is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Atmos Energy i.e., Atmos Energy and Darden Restaurants go up and down completely randomly.
Pair Corralation between Atmos Energy and Darden Restaurants
Assuming the 90 days horizon Atmos Energy is expected to generate 0.83 times more return on investment than Darden Restaurants. However, Atmos Energy is 1.2 times less risky than Darden Restaurants. It trades about 0.4 of its potential returns per unit of risk. Darden Restaurants is currently generating about 0.31 per unit of risk. If you would invest 12,623 in Atmos Energy on September 5, 2024 and sell it today you would earn a total of 1,512 from holding Atmos Energy or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atmos Energy vs. Darden Restaurants
Performance |
| Timeline |
| Atmos Energy |
| Darden Restaurants |
Atmos Energy and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Darden Restaurants
The main advantage of trading using opposite Atmos Energy and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| Atmos Energy vs. Darden Restaurants | Atmos Energy vs. AWILCO DRILLING PLC | Atmos Energy vs. Australian Agricultural | Atmos Energy vs. Penta Ocean Construction Co |
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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 the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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