Correlation Between MRC Global and Atlas Energy

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

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

Diversification Opportunities for MRC Global and Atlas Energy

0.64

Correlation Coefficient

MRC Global  Atlas Energy

Poor diversification

The 3 months correlation between MRC and Atlas is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and Atlas Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Energy Solutions and MRC Global 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 MRC Global are associated (or correlated) with Atlas Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Energy Solutions has no effect on the direction of MRC Global i.e., MRC Global and Atlas Energy go up and down completely randomly.

Pair Corralation between MRC Global and Atlas Energy

Considering the 90-day investment horizon MRC Global is expected to generate 44.87 times less return on investment than Atlas Energy. But when comparing it to its historical volatility, MRC Global is 19.49 times less risky than Atlas Energy. It trades about 0.02 of its potential returns per unit of risk. Atlas Energy Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Atlas Energy Solutions on September 14, 2024 and sell it today you would earn a total of  2,284  from holding Atlas Energy Solutions or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.3%
Values	Daily Returns

MRC Global  vs.  Atlas Energy Solutions

MRC Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MRC Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, MRC Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atlas Energy Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Energy Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Atlas Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MRC Global and Atlas Energy

The main advantage of trading using opposite MRC Global and Atlas Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global position performs unexpectedly, Atlas 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 Atlas Energy will offset losses from the drop in Atlas Energy's long position.

The idea behind MRC Global and Atlas Energy Solutions 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.