Correlation Between PXP Energy and Atlas Consolidated

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

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

Diversification Opportunities for PXP Energy and Atlas Consolidated

0.42

Correlation Coefficient

PXP Energy  Atlas Consolidated

Very weak diversification

The 3 months correlation between PXP and Atlas is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PXP Energy Corp and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining and PXP Energy 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 PXP Energy Corp are associated (or correlated) with Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of PXP Energy i.e., PXP Energy and Atlas Consolidated go up and down completely randomly.

Pair Corralation between PXP Energy and Atlas Consolidated

Assuming the 90 days trading horizon PXP Energy Corp is expected to generate 1.32 times more return on investment than Atlas Consolidated. However, PXP Energy is 1.32 times more volatile than Atlas Consolidated Mining. It trades about 0.05 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about 0.01 per unit of risk. If you would invest  288.00  in PXP Energy Corp on October 23, 2024 and sell it today you would earn a total of  6.00  from holding PXP Energy Corp or generate 2.08% return on investment over 90 days.

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

PXP Energy Corp  vs.  Atlas Consolidated Mining

PXP Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PXP Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Atlas Consolidated Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PXP Energy and Atlas Consolidated

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

The idea behind PXP Energy Corp and Atlas Consolidated Mining 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.