Correlation Between Ethereum and Atmos Energy

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

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

Diversification Opportunities for Ethereum and Atmos Energy

0.59

Correlation Coefficient

Ethereum  Atmos Energy

Very weak diversification

The 3 months correlation between Ethereum and Atmos is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Ethereum 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 Ethereum 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 Ethereum i.e., Ethereum and Atmos Energy go up and down completely randomly.

Pair Corralation between Ethereum and Atmos Energy

Assuming the 90 days trading horizon Ethereum is expected to generate 10.08 times more return on investment than Atmos Energy. However, Ethereum is 10.08 times more volatile than Atmos Energy. It trades about 0.12 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.28 per unit of risk. If you would invest  312,799  in Ethereum on October 9, 2024 and sell it today you would earn a total of  55,026  from holding Ethereum or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Ethereum  vs.  Atmos Energy

Ethereum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Atmos Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atmos Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum and Atmos Energy

The main advantage of trading using opposite Ethereum and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum 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 Ethereum 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.