Correlation Between Alphabet and Atmos Energy

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

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

Diversification Opportunities for Alphabet and Atmos Energy

0.62

Correlation Coefficient

Alphabet  Atmos Energy

Poor diversification

The 3 months correlation between Alphabet and Atmos is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Alphabet 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 Alphabet 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 Alphabet i.e., Alphabet and Atmos Energy go up and down completely randomly.

Pair Corralation between Alphabet and Atmos Energy

Assuming the 90 days trading horizon Alphabet is expected to under-perform the Atmos Energy. In addition to that, Alphabet is 6.4 times more volatile than Atmos Energy. It trades about -0.25 of its total potential returns per unit of risk. Atmos Energy is currently generating about -0.05 per unit of volatility. If you would invest  42,409  in Atmos Energy on December 30, 2024 and sell it today you would lose (384.00) from holding Atmos Energy or give up 0.91% of portfolio value over 90 days.

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

Alphabet  vs.  Atmos Energy

Alphabet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Atmos Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atmos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Atmos Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphabet and Atmos Energy

The main advantage of trading using opposite Alphabet and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.