Correlation Between Mastercard and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Mastercard 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 Mastercard and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Atmos Energy, you can compare the effects of market volatilities on Mastercard 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 Mastercard with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Atmos Energy.
Diversification Opportunities for Mastercard and Atmos Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mastercard and Atmos is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Mastercard 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 Mastercard 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 Mastercard i.e., Mastercard and Atmos Energy go up and down completely randomly.
Pair Corralation between Mastercard and Atmos Energy
Allowing for the 90-day total investment horizon Mastercard is expected to generate 1.4 times less return on investment than Atmos Energy. In addition to that, Mastercard is 1.1 times more volatile than Atmos Energy. It trades about 0.17 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.27 per unit of volatility. If you would invest 13,109 in Atmos Energy on September 3, 2024 and sell it today you would earn a total of 2,023 from holding Atmos Energy or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Atmos Energy
Performance |
| Timeline |
| Mastercard |
| Atmos Energy |
Mastercard and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Atmos Energy
The main advantage of trading using opposite Mastercard and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard 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.| Mastercard vs. American Express | Mastercard vs. Capital One Financial | Mastercard vs. Upstart Holdings | Mastercard vs. Ally Financial |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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