Correlation Between Atmos Energy and CenterPoint Energy
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 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
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Atmos and CenterPoint is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy 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 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
Assuming the 90 days horizon Atmos Energy is expected to generate 1.22 times less return on investment than CenterPoint Energy. But when comparing it to its historical volatility, Atmos Energy is 1.64 times less risky than CenterPoint Energy. It trades about 0.43 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,641 in CenterPoint Energy on September 1, 2024 and sell it today you would earn a total of 399.00 from holding CenterPoint Energy or generate 15.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atmos Energy vs. CenterPoint Energy
Performance |
| Timeline |
| Atmos Energy |
| CenterPoint Energy |
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. The Hanover Insurance | Atmos Energy vs. SIDETRADE EO 1 | Atmos Energy vs. Auto Trader Group | Atmos Energy vs. CANON MARKETING JP |
| CenterPoint Energy vs. National Beverage Corp | CenterPoint Energy vs. China Resources Beer | CenterPoint Energy vs. Fevertree Drinks PLC | CenterPoint Energy vs. Methode Electronics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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