Correlation Between Atmos Energy and Douglas Emmett

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

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

Diversification Opportunities for Atmos Energy and Douglas Emmett

-0.6

Correlation Coefficient

Atmos Energy  Douglas Emmett

Excellent diversification

The 3 months correlation between Atmos and Douglas is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett 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 Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Atmos Energy i.e., Atmos Energy and Douglas Emmett go up and down completely randomly.

Pair Corralation between Atmos Energy and Douglas Emmett

Considering the 90-day investment horizon Atmos Energy is expected to generate 0.51 times more return on investment than Douglas Emmett. However, Atmos Energy is 1.95 times less risky than Douglas Emmett. It trades about 0.16 of its potential returns per unit of risk. Douglas Emmett is currently generating about -0.09 per unit of risk. If you would invest  13,562  in Atmos Energy on December 18, 2024 and sell it today you would earn a total of  1,586  from holding Atmos Energy or generate 11.69% return on investment over 90 days.

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

Atmos Energy  vs.  Douglas Emmett

Atmos Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Atmos Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Douglas Emmett

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Atmos Energy and Douglas Emmett

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

The idea behind Atmos Energy and Douglas Emmett 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.