Correlation Between Atmos Energy and Suburban Propane
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Suburban Propane 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 Suburban Propane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Suburban Propane Partners, you can compare the effects of market volatilities on Atmos Energy and Suburban Propane 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 Suburban Propane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Suburban Propane.
Diversification Opportunities for Atmos Energy and Suburban Propane
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atmos and Suburban is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of Atmos Energy i.e., Atmos Energy and Suburban Propane go up and down completely randomly.
Pair Corralation between Atmos Energy and Suburban Propane
Considering the 90-day investment horizon Atmos Energy is expected to generate 0.5 times more return on investment than Suburban Propane. However, Atmos Energy is 1.99 times less risky than Suburban Propane. It trades about 0.28 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about -0.01 per unit of risk. If you would invest 11,135 in Atmos Energy on August 24, 2024 and sell it today you would earn a total of 3,891 from holding Atmos Energy or generate 34.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atmos Energy vs. Suburban Propane Partners
Performance |
| Timeline |
| Atmos Energy |
| Suburban Propane Partners |
Atmos Energy and Suburban Propane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Suburban Propane
The main advantage of trading using opposite Atmos Energy and Suburban Propane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Suburban Propane 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 Suburban Propane will offset losses from the drop in Suburban Propane's long position.| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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