Correlation Between Atlas Corp and Energy

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

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

Diversification Opportunities for Atlas Corp and Energy

-0.25

Correlation Coefficient

Atlas Corp  Energy

Very good diversification

The 3 months correlation between Atlas and Energy is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Corp and Energy and Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Environmental and Atlas 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 Atlas Corp are associated (or correlated) with Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Environmental has no effect on the direction of Atlas Corp i.e., Atlas Corp and Energy go up and down completely randomly.

Pair Corralation between Atlas Corp and Energy

Assuming the 90 days horizon Atlas Corp is expected to generate 3.5 times less return on investment than Energy. But when comparing it to its historical volatility, Atlas Corp is 14.91 times less risky than Energy. It trades about 0.1 of its potential returns per unit of risk. Energy and Environmental is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Energy and Environmental on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Energy and Environmental or generate 0.0% return on investment over 90 days.

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

Atlas Corp  vs.  Energy and Environmental

Atlas Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Energy and Environmental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energy and Environmental are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Atlas Corp and Energy

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

The idea behind Atlas Corp and Energy and Environmental 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.