Correlation Between Suburban Propane and Atmos Energy

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

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

Diversification Opportunities for Suburban Propane and Atmos Energy

0.55

Correlation Coefficient

Suburban Propane  Atmos Energy

Very weak diversification

The 3 months correlation between Suburban and Atmos is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Atmos Energy go up and down completely randomly.

Pair Corralation between Suburban Propane and Atmos Energy

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 1.19 times more return on investment than Atmos Energy. However, Suburban Propane is 1.19 times more volatile than Atmos Energy. It trades about 0.56 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.21 per unit of risk. If you would invest  1,728  in Suburban Propane Partners on October 23, 2024 and sell it today you would earn a total of  257.00  from holding Suburban Propane Partners or generate 14.87% return on investment over 90 days.

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

Suburban Propane Partners  vs.  Atmos Energy

Suburban Propane Partners

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Atmos Energy

Risk-Adjusted Performance

3 of 100

Weak

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Suburban Propane and Atmos Energy

The main advantage of trading using opposite Suburban Propane and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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 Suburban Propane Partners 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.