Correlation Between Amgen and ATMOS

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

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

Diversification Opportunities for Amgen and ATMOS

0.67

Correlation Coefficient

Amgen  ATMOS

Poor diversification

The 3 months correlation between Amgen and ATMOS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and ATMOS ENERGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMOS ENERGY P and Amgen 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 Amgen Inc are associated (or correlated) with ATMOS. 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 P has no effect on the direction of Amgen i.e., Amgen and ATMOS go up and down completely randomly.

Pair Corralation between Amgen and ATMOS

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the ATMOS. In addition to that, Amgen is 3.46 times more volatile than ATMOS ENERGY P. It trades about -0.2 of its total potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.12 per unit of volatility. If you would invest  9,764  in ATMOS ENERGY P on September 23, 2024 and sell it today you would lose (320.00) from holding ATMOS ENERGY P or give up 3.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.69%
Values	Daily Returns

Amgen Inc  vs.  ATMOS ENERGY P

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ATMOS ENERGY P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Amgen and ATMOS

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

The idea behind Amgen Inc and ATMOS ENERGY P 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.