Correlation Between Atlas Engineered and Badger Infrastructure

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

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

Diversification Opportunities for Atlas Engineered and Badger Infrastructure

0.21

Correlation Coefficient

Atlas Engineered  Badger Infrastructure

Modest diversification

The 3 months correlation between Atlas and Badger is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Engineered Products and Badger Infrastructure Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger Infrastructure and Atlas Engineered 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 Atlas Engineered Products are associated (or correlated) with Badger Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger Infrastructure has no effect on the direction of Atlas Engineered i.e., Atlas Engineered and Badger Infrastructure go up and down completely randomly.

Pair Corralation between Atlas Engineered and Badger Infrastructure

Assuming the 90 days horizon Atlas Engineered Products is expected to generate 1.21 times more return on investment than Badger Infrastructure. However, Atlas Engineered is 1.21 times more volatile than Badger Infrastructure Solutions. It trades about -0.02 of its potential returns per unit of risk. Badger Infrastructure Solutions is currently generating about -0.03 per unit of risk. If you would invest  132.00  in Atlas Engineered Products on September 21, 2024 and sell it today you would lose (7.00) from holding Atlas Engineered Products or give up 5.3% of portfolio value over 90 days.

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

Atlas Engineered Products  vs.  Badger Infrastructure Solution

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. In spite of fairly stable basic indicators, Atlas Engineered is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Badger Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Badger Infrastructure Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Badger Infrastructure is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Atlas Engineered and Badger Infrastructure

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

The idea behind Atlas Engineered Products and Badger Infrastructure Solutions 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.