Correlation Between Atmos Energy and Snam SpA

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

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

Diversification Opportunities for Atmos Energy and Snam SpA

0.56

Correlation Coefficient

Atmos Energy  Snam SpA

Very weak diversification

The 3 months correlation between Atmos and Snam is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA 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 Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of Atmos Energy i.e., Atmos Energy and Snam SpA go up and down completely randomly.

Pair Corralation between Atmos Energy and Snam SpA

Assuming the 90 days horizon Atmos Energy is expected to generate 5.17 times less return on investment than Snam SpA. In addition to that, Atmos Energy is 1.62 times more volatile than Snam SpA. It trades about 0.02 of its total potential returns per unit of risk. Snam SpA is currently generating about 0.15 per unit of volatility. If you would invest  428.00  in Snam SpA on December 1, 2024 and sell it today you would earn a total of  32.00  from holding Snam SpA or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Atmos Energy  vs.  Snam SpA

Atmos Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Atmos Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Snam SpA

Risk-Adjusted Performance

Good

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

Pair Trading with Atmos Energy and Snam SpA

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

The idea behind Atmos Energy and Snam SpA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.