Correlation Between Atlantica Sustainable and RGC Resources

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Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and RGC Resources 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 Atlantica Sustainable and RGC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and RGC Resources, you can compare the effects of market volatilities on Atlantica Sustainable and RGC Resources 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 Atlantica Sustainable with a short position of RGC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and RGC Resources.

Diversification Opportunities for Atlantica Sustainable and RGC Resources

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Atlantica and RGC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and RGC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RGC Resources and Atlantica Sustainable 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 Atlantica Sustainable Infrastructure are associated (or correlated) with RGC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RGC Resources has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and RGC Resources go up and down completely randomly.

Pair Corralation between Atlantica Sustainable and RGC Resources

Allowing for the 90-day total investment horizon Atlantica Sustainable Infrastructure is expected to generate 0.02 times more return on investment than RGC Resources. However, Atlantica Sustainable Infrastructure is 63.67 times less risky than RGC Resources. It trades about 0.76 of its potential returns per unit of risk. RGC Resources is currently generating about -0.09 per unit of risk. If you would invest  2,191  in Atlantica Sustainable Infrastructure on September 23, 2024 and sell it today you would earn a total of  8.00  from holding Atlantica Sustainable Infrastructure or generate 0.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy66.67%
ValuesDaily Returns

Atlantica Sustainable Infrastr  vs.  RGC Resources

 Performance 
       Timeline  
Atlantica Sustainable 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Atlantica Sustainable Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
RGC Resources 

Risk-Adjusted Performance

0 of 100

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

Atlantica Sustainable and RGC Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Atlantica Sustainable and RGC Resources

The main advantage of trading using opposite Atlantica Sustainable and RGC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable position performs unexpectedly, RGC Resources 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 RGC Resources will offset losses from the drop in RGC Resources' long position.
The idea behind Atlantica Sustainable Infrastructure and RGC Resources 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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