Correlation Between GMS and ATMOS

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

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

Diversification Opportunities for GMS and ATMOS

0.38

Correlation Coefficient

GMS  ATMOS

Weak diversification

The 3 months correlation between GMS and ATMOS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding GMS 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 GMS 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 GMS 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 GMS i.e., GMS and ATMOS go up and down completely randomly.

Pair Corralation between GMS and ATMOS

Considering the 90-day investment horizon GMS Inc is expected to under-perform the ATMOS. In addition to that, GMS is 3.76 times more volatile than ATMOS ENERGY P. It trades about -0.05 of its total potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.18 per unit of volatility. If you would invest  9,758  in ATMOS ENERGY P on September 30, 2024 and sell it today you would lose (432.00) from holding ATMOS ENERGY P or give up 4.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.38%
Values	Daily Returns

GMS Inc  vs.  ATMOS ENERGY P

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, GMS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 GMS and ATMOS

The main advantage of trading using opposite GMS and ATMOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.