Correlation Between RGC Resources and Atmos Energy

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

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

Diversification Opportunities for RGC Resources and Atmos Energy

-0.01

Correlation Coefficient

RGC Resources  Atmos Energy

Good diversification

The 3 months correlation between RGC and Atmos is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding RGC Resources and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and RGC Resources 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 RGC Resources 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 RGC Resources i.e., RGC Resources and Atmos Energy go up and down completely randomly.

Pair Corralation between RGC Resources and Atmos Energy

Given the investment horizon of 90 days RGC Resources is expected to generate 2.35 times more return on investment than Atmos Energy. However, RGC Resources is 2.35 times more volatile than Atmos Energy. It trades about -0.05 of its potential returns per unit of risk. Atmos Energy is currently generating about -0.3 per unit of risk. If you would invest  2,051  in RGC Resources on September 19, 2024 and sell it today you would lose (69.00) from holding RGC Resources or give up 3.36% of portfolio value over 90 days.

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

RGC Resources  vs.  Atmos Energy

RGC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RGC Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Atmos Energy

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 1 (%) 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 RGC Resources and Atmos Energy

The main advantage of trading using opposite RGC Resources and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RGC Resources 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 RGC Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.