Correlation Between Atmos Energy and Fomento Economico

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

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

Diversification Opportunities for Atmos Energy and Fomento Economico

-0.34

Correlation Coefficient

Atmos Energy  Fomento Economico

Very good diversification

The 3 months correlation between Atmos and Fomento is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Atmos Energy i.e., Atmos Energy and Fomento Economico go up and down completely randomly.

Pair Corralation between Atmos Energy and Fomento Economico

Considering the 90-day investment horizon Atmos Energy is expected to generate 0.56 times more return on investment than Fomento Economico. However, Atmos Energy is 1.78 times less risky than Fomento Economico. It trades about -0.16 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.22 per unit of risk. If you would invest  14,105  in Atmos Energy on October 9, 2024 and sell it today you would lose (454.00) from holding Atmos Energy or give up 3.22% 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.  Fomento Economico Mexicano

Atmos Energy

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Atmos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Atmos Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Fomento Economico

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fomento Economico Mexicano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Atmos Energy and Fomento Economico

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

The idea behind Atmos Energy and Fomento Economico Mexicano 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.