Correlation Between Atmos Energy and Seadrill
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Seadrill 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 Seadrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Seadrill Limited, you can compare the effects of market volatilities on Atmos Energy and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Seadrill.
Diversification Opportunities for Atmos Energy and Seadrill
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Atmos and Seadrill is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Atmos Energy i.e., Atmos Energy and Seadrill go up and down completely randomly.
Pair Corralation between Atmos Energy and Seadrill
Considering the 90-day investment horizon Atmos Energy is expected to generate 0.65 times more return on investment than Seadrill. However, Atmos Energy is 1.55 times less risky than Seadrill. It trades about -0.27 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.37 per unit of risk. If you would invest 14,918 in Atmos Energy on September 23, 2024 and sell it today you would lose (949.00) from holding Atmos Energy or give up 6.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Atmos Energy vs. Seadrill Limited
Performance |
Timeline |
Atmos Energy |
Seadrill Limited |
Atmos Energy and Seadrill Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Atmos Energy and Seadrill
The main advantage of trading using opposite Atmos Energy and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.Atmos Energy vs. NewJersey Resources | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities | Atmos Energy vs. UGI Corporation |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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