Correlation Between Nuvalent and Atmos Energy

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

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

Diversification Opportunities for Nuvalent and Atmos Energy

-0.23

Correlation Coefficient

Nuvalent  Atmos Energy

Very good diversification

The 3 months correlation between Nuvalent and Atmos is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Nuvalent 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 Nuvalent 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 Nuvalent i.e., Nuvalent and Atmos Energy go up and down completely randomly.

Pair Corralation between Nuvalent and Atmos Energy

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Atmos Energy. In addition to that, Nuvalent is 1.96 times more volatile than Atmos Energy. It trades about -0.2 of its total potential returns per unit of risk. Atmos Energy is currently generating about -0.28 per unit of volatility. If you would invest  14,939  in Atmos Energy on September 22, 2024 and sell it today you would lose (970.00) from holding Atmos Energy or give up 6.49% of portfolio value over 90 days.

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

Nuvalent  vs.  Atmos Energy

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Atmos Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Atmos Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuvalent and Atmos Energy

The main advantage of trading using opposite Nuvalent and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvalent 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 Nuvalent 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.