Correlation Between Atmos Energy and APA

Can any of the company-specific risk be diversified away by investing in both Atmos Energy and APA 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 APA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atmos Energy and APA Group, you can compare the effects of market volatilities on Atmos Energy and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and APA.

Diversification Opportunities for Atmos Energy and APA

-0.39

Correlation Coefficient

Atmos Energy  APA

Very good diversification

The 3 months correlation between Atmos and APA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of Atmos Energy i.e., Atmos Energy and APA go up and down completely randomly.

Pair Corralation between Atmos Energy and APA

Assuming the 90 days horizon Atmos Energy is expected to under-perform the APA. But the stock apears to be less risky and, when comparing its historical volatility, Atmos Energy is 2.17 times less risky than APA. The stock trades about -0.31 of its potential returns per unit of risk. The APA Group is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  437.00  in APA Group on September 25, 2024 and sell it today you would lose (16.00) from holding APA Group or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Atmos Energy  vs.  APA Group

Atmos Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Atmos Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

APA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APA Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Atmos Energy and APA

The main advantage of trading using opposite Atmos Energy and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.

The idea behind Atmos Energy and APA Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.