Correlation Between Atmos Energy and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and TransAlta Corp 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 TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and TransAlta Corp, you can compare the effects of market volatilities on Atmos Energy and TransAlta Corp 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 TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and TransAlta Corp.
Diversification Opportunities for Atmos Energy and TransAlta Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atmos and TransAlta is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp 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 TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Atmos Energy i.e., Atmos Energy and TransAlta Corp go up and down completely randomly.
Pair Corralation between Atmos Energy and TransAlta Corp
Considering the 90-day investment horizon Atmos Energy is expected to generate 1.07 times less return on investment than TransAlta Corp. But when comparing it to its historical volatility, Atmos Energy is 3.13 times less risky than TransAlta Corp. It trades about 0.3 of its potential returns per unit of risk. TransAlta Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,021 in TransAlta Corp on August 27, 2024 and sell it today you would earn a total of 58.00 from holding TransAlta Corp or generate 5.68% 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. TransAlta Corp
Performance |
| Timeline |
| Atmos Energy |
| TransAlta Corp |
Atmos Energy and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and TransAlta Corp
The main advantage of trading using opposite Atmos Energy and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.The idea behind Atmos Energy and TransAlta Corp 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.| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |