Correlation Between Nasdaq and Atmos Energy

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and Atmos Energy 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 Nasdaq and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Atmos Energy, you can compare the effects of market volatilities on Nasdaq and Atmos Energy 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 Nasdaq with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Atmos Energy.

Diversification Opportunities for Nasdaq and Atmos Energy

NasdaqAtmosDiversified AwayNasdaqAtmosDiversified Away100%
0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Nasdaq and Atmos is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Atmos Energy. 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 has no effect on the direction of Nasdaq i.e., Nasdaq and Atmos Energy go up and down completely randomly.

Pair Corralation between Nasdaq and Atmos Energy

Given the investment horizon of 90 days Nasdaq is expected to generate 1.56 times less return on investment than Atmos Energy. But when comparing it to its historical volatility, Nasdaq Inc is 1.08 times less risky than Atmos Energy. It trades about 0.09 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  12,255  in Atmos Energy on September 24, 2024 and sell it today you would earn a total of  1,135  from holding Atmos Energy or generate 9.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Atmos Energy

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -5051015
JavaScript chart by amCharts 3.21.15NDAQ AEO
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec72747678808284
Atmos Energy 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atmos Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec125130135140

Nasdaq and Atmos Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.17-2.37-1.58-0.780.00.81.632.453.284.11 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15NDAQ AEO
       Returns  

Pair Trading with Nasdaq and Atmos Energy

The main advantage of trading using opposite Nasdaq and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Atmos Energy 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 Energy will offset losses from the drop in Atmos Energy's long position.
The idea behind Nasdaq Inc and Atmos Energy 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.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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