Correlation Between Spire and Atmos Energy

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

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

Diversification Opportunities for Spire and Atmos Energy

0.62

Correlation Coefficient

Spire  Atmos Energy

Poor diversification

The 3 months correlation between Spire and Atmos is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Spire 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 Spire Inc 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 Spire i.e., Spire and Atmos Energy go up and down completely randomly.

Pair Corralation between Spire and Atmos Energy

Allowing for the 90-day total investment horizon Spire is expected to generate 1.29 times less return on investment than Atmos Energy. In addition to that, Spire is 1.6 times more volatile than Atmos Energy. It trades about 0.14 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.29 per unit of volatility. If you would invest  12,998  in Atmos Energy on August 30, 2024 and sell it today you would earn a total of  2,145  from holding Atmos Energy or generate 16.5% return on investment over 90 days.

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

Spire Inc  vs.  Atmos Energy

Spire Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Spire may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Atmos Energy

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Atmos Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire and Atmos Energy

The main advantage of trading using opposite Spire and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire 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 Spire Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..