Correlation Between Atmos Energy and Allete
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Allete 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 Allete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Allete Inc, you can compare the effects of market volatilities on Atmos Energy and Allete 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 Allete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Allete.
Diversification Opportunities for Atmos Energy and Allete
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Atmos and Allete is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc 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 Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of Atmos Energy i.e., Atmos Energy and Allete go up and down completely randomly.
Pair Corralation between Atmos Energy and Allete
Considering the 90-day investment horizon Atmos Energy is expected to generate 0.89 times more return on investment than Allete. However, Atmos Energy is 1.13 times less risky than Allete. It trades about 0.06 of its potential returns per unit of risk. Allete Inc is currently generating about 0.02 per unit of risk. If you would invest 11,166 in Atmos Energy on August 30, 2024 and sell it today you would earn a total of 3,977 from holding Atmos Energy or generate 35.62% 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. Allete Inc
Performance |
| Timeline |
| Atmos Energy |
| Allete Inc |
Atmos Energy and Allete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Allete
The main advantage of trading using opposite Atmos Energy and Allete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Allete 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 Allete will offset losses from the drop in Allete's long position.| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete vs. Companhia Paranaense de |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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