Correlation Between Travis Perkins and Atlas Engineered

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

By analyzing existing cross correlation between Travis Perkins PLC and Atlas Engineered Products, you can compare the effects of market volatilities on Travis Perkins and Atlas Engineered 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 Travis Perkins with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travis Perkins and Atlas Engineered.

Diversification Opportunities for Travis Perkins and Atlas Engineered

0.88

Correlation Coefficient

Travis Perkins  Atlas Engineered

Very poor diversification

The 3 months correlation between Travis and Atlas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Travis Perkins PLC and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and Travis Perkins 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 Travis Perkins PLC are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Travis Perkins i.e., Travis Perkins and Atlas Engineered go up and down completely randomly.

Pair Corralation between Travis Perkins and Atlas Engineered

Assuming the 90 days horizon Travis Perkins PLC is expected to under-perform the Atlas Engineered. But the pink sheet apears to be less risky and, when comparing its historical volatility, Travis Perkins PLC is 1.71 times less risky than Atlas Engineered. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Atlas Engineered Products is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Atlas Engineered Products on September 4, 2024 and sell it today you would lose (5.00) from holding Atlas Engineered Products or give up 5.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Travis Perkins PLC  vs.  Atlas Engineered Products

Travis Perkins PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Travis Perkins PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Atlas Engineered Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Engineered Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atlas Engineered is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Travis Perkins and Atlas Engineered

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

The idea behind Travis Perkins PLC and Atlas Engineered Products 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.