Correlation Between Atmos Energy and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Atmos Energy and Western Midstream 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 Atmos Energy and Western Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atmos Energy and Western Midstream Partners, you can compare the effects of market volatilities on Atmos Energy and Western Midstream 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 Atmos Energy with a short position of Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atmos Energy and Western Midstream.
Diversification Opportunities for Atmos Energy and Western Midstream
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Atmos and Western is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream and Atmos Energy 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 Atmos Energy are associated (or correlated) with Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Atmos Energy i.e., Atmos Energy and Western Midstream go up and down completely randomly.
Pair Corralation between Atmos Energy and Western Midstream
Considering the 90-day investment horizon Atmos Energy is expected to generate 0.6 times more return on investment than Western Midstream. However, Atmos Energy is 1.66 times less risky than Western Midstream. It trades about 0.06 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.01 per unit of risk. If you would invest 13,618 in Atmos Energy on September 13, 2024 and sell it today you would earn a total of 385.00 from holding Atmos Energy or generate 2.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Atmos Energy vs. Western Midstream Partners
Performance |
Timeline |
Atmos Energy |
Western Midstream |
Atmos Energy and Western Midstream Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Atmos Energy and Western Midstream
The main advantage of trading using opposite Atmos Energy and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmos Energy position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream's long position.Atmos Energy vs. One Gas | Atmos Energy vs. NiSource | Atmos Energy vs. Aquagold International | Atmos Energy vs. Thrivent High Yield |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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