Correlation Between Black Hills and ATMOS

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

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

Diversification Opportunities for Black Hills and ATMOS

0.02

Correlation Coefficient

Black Hills  ATMOS

Significant diversification

The 3 months correlation between Black and ATMOS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills 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 Black Hills 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 Black Hills 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 Black Hills i.e., Black Hills and ATMOS go up and down completely randomly.

Pair Corralation between Black Hills and ATMOS

Considering the 90-day investment horizon Black Hills is expected to generate 1.1 times more return on investment than ATMOS. However, Black Hills is 1.1 times more volatile than ATMOS ENERGY P. It trades about -0.03 of its potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.24 per unit of risk. If you would invest  6,042  in Black Hills on September 27, 2024 and sell it today you would lose (144.00) from holding Black Hills or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.63%
Values	Daily Returns

Black Hills  vs.  ATMOS ENERGY P

Black Hills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Hills has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 weak performance in the last few months, the Bond's basic indicators remain somewhat 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 ATMOS ENERGY P investors.

Pair Trading with Black Hills and ATMOS

The main advantage of trading using opposite Black Hills and ATMOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills 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 Black Hills 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.