Correlation Between Black Hills and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Black Hills and Atmos Energy 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 Black Hills and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Atmos Energy, you can compare the effects of market volatilities on Black Hills and Atmos Energy 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 Black Hills with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Atmos Energy.
Diversification Opportunities for Black Hills and Atmos Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Atmos is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Black Hills 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 Black Hills are associated (or correlated) with Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Black Hills i.e., Black Hills and Atmos Energy go up and down completely randomly.
Pair Corralation between Black Hills and Atmos Energy
Considering the 90-day investment horizon Black Hills is expected to generate 6.79 times less return on investment than Atmos Energy. In addition to that, Black Hills is 1.3 times more volatile than Atmos Energy. It trades about 0.01 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.06 per unit of volatility. If you would invest 11,058 in Atmos Energy on August 24, 2024 and sell it today you would earn a total of 3,947 from holding Atmos Energy or generate 35.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Atmos Energy
Performance |
| Timeline |
| Black Hills |
| Atmos Energy |
Black Hills and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Atmos Energy
The main advantage of trading using opposite Black Hills and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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