Correlation Between BAXALTA and Atmos Energy

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

By analyzing existing cross correlation between BAXALTA INC 525 and Atmos Energy, you can compare the effects of market volatilities on BAXALTA 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 BAXALTA with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAXALTA and Atmos Energy.

Diversification Opportunities for BAXALTA and Atmos Energy

-0.76

Correlation Coefficient

BAXALTA  Atmos Energy

Pay attention - limited upside

The 3 months correlation between BAXALTA and Atmos is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BAXALTA INC 525 and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and BAXALTA 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 BAXALTA INC 525 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 BAXALTA i.e., BAXALTA and Atmos Energy go up and down completely randomly.

Pair Corralation between BAXALTA and Atmos Energy

Assuming the 90 days trading horizon BAXALTA INC 525 is expected to under-perform the Atmos Energy. But the bond apears to be less risky and, when comparing its historical volatility, BAXALTA INC 525 is 1.04 times less risky than Atmos Energy. The bond trades about -0.04 of its potential returns per unit of risk. The Atmos Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,839  in Atmos Energy on December 22, 2024 and sell it today you would earn a total of  1,024  from holding Atmos Energy or generate 7.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.33%
Values	Daily Returns

BAXALTA INC 525  vs.  Atmos Energy

BAXALTA INC 525

Risk-Adjusted Performance

Very Weak

Over the last 90 days BAXALTA INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAXALTA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Atmos Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Atmos Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BAXALTA and Atmos Energy

The main advantage of trading using opposite BAXALTA and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAXALTA 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 BAXALTA INC 525 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.