Correlation Between Southern and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Southern 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 Southern and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Co and Atmos Energy, you can compare the effects of market volatilities on Southern 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 Southern with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern and Atmos Energy.
Diversification Opportunities for Southern and Atmos Energy
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Atmos is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Southern Co and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Southern 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 Southern Co 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 Southern i.e., Southern and Atmos Energy go up and down completely randomly.
Pair Corralation between Southern and Atmos Energy
Given the investment horizon of 90 days Southern Co is expected to under-perform the Atmos Energy. But the preferred stock apears to be less risky and, when comparing its historical volatility, Southern Co is 1.39 times less risky than Atmos Energy. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Atmos Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 14,149 in Atmos Energy on August 28, 2024 and sell it today you would earn a total of 869.00 from holding Atmos Energy or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Co vs. Atmos Energy
Performance |
| Timeline |
| Southern |
| Atmos Energy |
Southern and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern and Atmos Energy
The main advantage of trading using opposite Southern and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern 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.| Southern vs. AKITA Drilling | Southern vs. Transocean | Southern vs. Universal Technical Institute | Southern vs. AMREP |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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