Correlation Between Atmos Energy and Suburban Propane

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

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

Diversification Opportunities for Atmos Energy and Suburban Propane

0.77

Correlation Coefficient

Atmos Energy  Suburban Propane

Poor diversification

The 3 months correlation between Atmos and Suburban is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of Atmos Energy i.e., Atmos Energy and Suburban Propane go up and down completely randomly.

Pair Corralation between Atmos Energy and Suburban Propane

Considering the 90-day investment horizon Atmos Energy is expected to generate 1.32 times less return on investment than Suburban Propane. But when comparing it to its historical volatility, Atmos Energy is 2.28 times less risky than Suburban Propane. It trades about 0.28 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,814  in Suburban Propane Partners on September 5, 2024 and sell it today you would earn a total of  153.00  from holding Suburban Propane Partners or generate 8.43% return on investment over 90 days.

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

Atmos Energy  vs.  Suburban Propane Partners

Atmos Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 15 (%) 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 January 2025.

Suburban Propane Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atmos Energy and Suburban Propane

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

The idea behind Atmos Energy and Suburban Propane Partners 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.