Correlation Between European Wax and ATMOS

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

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

Diversification Opportunities for European Wax and ATMOS

0.59

Correlation Coefficient

European Wax  ATMOS

Very weak diversification

The 3 months correlation between European and ATMOS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center 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 European Wax 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 European Wax Center 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 European Wax i.e., European Wax and ATMOS go up and down completely randomly.

Pair Corralation between European Wax and ATMOS

Given the investment horizon of 90 days European Wax Center is expected to under-perform the ATMOS. In addition to that, European Wax is 2.68 times more volatile than ATMOS ENERGY P. It trades about -0.03 of its total potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.02 per unit of volatility. If you would invest  10,470  in ATMOS ENERGY P on September 25, 2024 and sell it today you would lose (639.00) from holding ATMOS ENERGY P or give up 6.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.58%
Values	Daily Returns

European Wax Center  vs.  ATMOS ENERGY P

European Wax Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Wax Center 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 fundamental indicators remain fairly 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 the company 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 uncertain 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 European Wax and ATMOS

The main advantage of trading using opposite European Wax and ATMOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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 European Wax Center 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.