Correlation Between Atmos Energy and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Olympic Steel 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 Olympic Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Olympic Steel, you can compare the effects of market volatilities on Atmos Energy and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Olympic Steel.
Diversification Opportunities for Atmos Energy and Olympic Steel
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Atmos and Olympic is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Atmos Energy i.e., Atmos Energy and Olympic Steel go up and down completely randomly.
Pair Corralation between Atmos Energy and Olympic Steel
Considering the 90-day investment horizon Atmos Energy is expected to generate 1.91 times less return on investment than Olympic Steel. But when comparing it to its historical volatility, Atmos Energy is 4.18 times less risky than Olympic Steel. It trades about 0.5 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,588 in Olympic Steel on September 1, 2024 and sell it today you would earn a total of 640.00 from holding Olympic Steel or generate 17.84% 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. Olympic Steel
Performance |
| Timeline |
| Atmos Energy |
| Olympic Steel |
Atmos Energy and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atmos Energy and Olympic Steel
The main advantage of trading using opposite Atmos Energy and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
| Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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