Correlation Between Apple and Atmos Energy

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

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

Diversification Opportunities for Apple and Atmos Energy

-0.31

Correlation Coefficient

Apple  Atmos Energy

Very good diversification

The 3 months correlation between Apple and Atmos is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Apple 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 Apple Inc 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 Apple i.e., Apple and Atmos Energy go up and down completely randomly.

Pair Corralation between Apple and Atmos Energy

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Atmos Energy. In addition to that, Apple is 1.27 times more volatile than Atmos Energy. It trades about -0.04 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.13 per unit of volatility. If you would invest  13,367  in Atmos Energy on December 2, 2024 and sell it today you would earn a total of  1,008  from holding Atmos Energy or generate 7.54% return on investment over 90 days.

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

Apple Inc  vs.  Atmos Energy

Apple Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and Atmos Energy

The main advantage of trading using opposite Apple and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.