Correlation Between Entravision Communications and Atmos Energy

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

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

Diversification Opportunities for Entravision Communications and Atmos Energy

0.5

Correlation Coefficient

Entravision Communications  Atmos Energy

Very weak diversification

The 3 months correlation between Entravision and Atmos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and Atmos Energy go up and down completely randomly.

Pair Corralation between Entravision Communications and Atmos Energy

Assuming the 90 days horizon Entravision Communications is expected to generate 3.75 times more return on investment than Atmos Energy. However, Entravision Communications is 3.75 times more volatile than Atmos Energy. It trades about 0.0 of its potential returns per unit of risk. Atmos Energy is currently generating about -0.05 per unit of risk. If you would invest  233.00  in Entravision Communications on October 11, 2024 and sell it today you would lose (3.00) from holding Entravision Communications or give up 1.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Entravision Communications  vs.  Atmos Energy

Entravision Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Atmos Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Atmos Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Entravision Communications and Atmos Energy

The main advantage of trading using opposite Entravision Communications and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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 Entravision Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.