Correlation Between Atmos Energy and Nuvalent

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

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

Diversification Opportunities for Atmos Energy and Nuvalent

-0.23

Correlation Coefficient

Atmos Energy  Nuvalent

Very good diversification

The 3 months correlation between Atmos and Nuvalent is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent 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 Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Atmos Energy i.e., Atmos Energy and Nuvalent go up and down completely randomly.

Pair Corralation between Atmos Energy and Nuvalent

Considering the 90-day investment horizon Atmos Energy is expected to generate 0.51 times more return on investment than Nuvalent. However, Atmos Energy is 1.96 times less risky than Nuvalent. It trades about -0.28 of its potential returns per unit of risk. Nuvalent is currently generating about -0.2 per unit of risk. If you would invest  14,939  in Atmos Energy on September 22, 2024 and sell it today you would lose (970.00) from holding Atmos Energy or give up 6.49% 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.  Nuvalent

Atmos Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Atmos Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Atmos Energy and Nuvalent

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

The idea behind Atmos Energy and Nuvalent 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.