Correlation Between Definitive Healthcare and Atmos Energy

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

Diversification Opportunities for Definitive Healthcare and Atmos Energy

DefinitiveAtmosDiversified AwayDefinitiveAtmosDiversified Away100%
0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Definitive and Atmos is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Atmos Energy go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Atmos Energy

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the Atmos Energy. In addition to that, Definitive Healthcare is 2.28 times more volatile than Atmos Energy. It trades about -0.02 of its total potential returns per unit of risk. Atmos Energy is currently generating about -0.02 per unit of volatility. If you would invest  13,947  in Atmos Energy on October 14, 2024 and sell it today you would lose (243.00) from holding Atmos Energy or give up 1.74% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Definitive Healthcare Corp  vs.  Atmos Energy

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 0510
JavaScript chart by amCharts 3.21.15DH ATO
       Timeline  
Definitive Healthcare 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Definitive Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.14.24.34.44.54.64.74.8
Atmos Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Atmos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan140145150

Definitive Healthcare and Atmos Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.43-5.57-3.7-1.840.011.843.725.597.47 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15DH ATO
       Returns  

Pair Trading with Definitive Healthcare and Atmos Energy

The main advantage of trading using opposite Definitive Healthcare and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.
The idea behind Definitive Healthcare Corp and Atmos Energy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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