Correlation Between Atmos Energy and Universal Technical

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

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

Diversification Opportunities for Atmos Energy and Universal Technical

0.49

Correlation Coefficient

Atmos Energy  Universal Technical

Very weak diversification

The 3 months correlation between Atmos and Universal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical 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 Universal Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Technical has no effect on the direction of Atmos Energy i.e., Atmos Energy and Universal Technical go up and down completely randomly.

Pair Corralation between Atmos Energy and Universal Technical

Considering the 90-day investment horizon Atmos Energy is expected to generate 29.4 times less return on investment than Universal Technical. But when comparing it to its historical volatility, Atmos Energy is 3.65 times less risky than Universal Technical. It trades about 0.03 of its potential returns per unit of risk. Universal Technical Institute is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,626  in Universal Technical Institute on September 28, 2024 and sell it today you would earn a total of  1,027  from holding Universal Technical Institute or generate 63.16% return on investment over 90 days.

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

Atmos Energy  vs.  Universal Technical Institute

Atmos Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 2 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Universal Technical

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atmos Energy and Universal Technical

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

The idea behind Atmos Energy and Universal Technical Institute 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.