Correlation Between Atmos Energy and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Bowhead Specialty 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 Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Atmos Energy and Bowhead Specialty 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 Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Bowhead Specialty.
Diversification Opportunities for Atmos Energy and Bowhead Specialty
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Atmos and Bowhead is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty 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 Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Atmos Energy i.e., Atmos Energy and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Atmos Energy and Bowhead Specialty
Considering the 90-day investment horizon Atmos Energy is expected to generate 3.05 times less return on investment than Bowhead Specialty. But when comparing it to its historical volatility, Atmos Energy is 1.96 times less risky than Bowhead Specialty. It trades about 0.3 of its potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 2,997 in Bowhead Specialty Holdings on August 27, 2024 and sell it today you would earn a total of 583.00 from holding Bowhead Specialty Holdings or generate 19.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atmos Energy vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Atmos Energy |
| Bowhead Specialty |
Atmos Energy and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Bowhead Specialty
The main advantage of trading using opposite Atmos Energy and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.The idea behind Atmos Energy and Bowhead Specialty Holdings 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.| Bowhead Specialty vs. HF Sinclair Corp | Bowhead Specialty vs. Atmos Energy | Bowhead Specialty vs. NiSource | Bowhead Specialty vs. Black Hills |
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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