Correlation Between Atmos Energy and Universal
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Universal 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 Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Universal, you can compare the effects of market volatilities on Atmos Energy and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Universal.
Diversification Opportunities for Atmos Energy and Universal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Atmos and Universal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Atmos Energy i.e., Atmos Energy and Universal go up and down completely randomly.
Pair Corralation between Atmos Energy and Universal
Considering the 90-day investment horizon Atmos Energy is expected to generate 2.09 times less return on investment than Universal. But when comparing it to its historical volatility, Atmos Energy is 1.36 times less risky than Universal. It trades about 0.22 of its potential returns per unit of risk. Universal is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 5,029 in Universal on August 24, 2024 and sell it today you would earn a total of 539.00 from holding Universal or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atmos Energy vs. Universal
Performance |
| Timeline |
| Atmos Energy |
| Universal |
Atmos Energy and Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Universal
The main advantage of trading using opposite Atmos Energy and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal's long position.| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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