Correlation Between UGI Corp and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both UGI Corp 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 UGI Corp and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corp Unit and Atmos Energy, you can compare the effects of market volatilities on UGI Corp 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 UGI Corp with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI Corp and Atmos Energy.
Diversification Opportunities for UGI Corp and Atmos Energy
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UGI and Atmos is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp Unit and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and UGI Corp 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 UGI Corp Unit 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 UGI Corp i.e., UGI Corp and Atmos Energy go up and down completely randomly.
Pair Corralation between UGI Corp and Atmos Energy
Given the investment horizon of 90 days UGI Corp Unit is expected to under-perform the Atmos Energy. In addition to that, UGI Corp is 1.54 times more volatile than Atmos Energy. It trades about -0.08 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 11,209 in Atmos Energy on August 27, 2024 and sell it today you would earn a total of 3,796 from holding Atmos Energy or generate 33.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 31.65% |
| Values | Daily Returns |
UGI Corp Unit vs. Atmos Energy
Performance |
| Timeline |
| UGI Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Atmos Energy |
UGI Corp and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI Corp and Atmos Energy
The main advantage of trading using opposite UGI Corp and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI Corp 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.The idea behind UGI Corp Unit and Atmos Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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