Correlation Between NRG Energy and ATMOS

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

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

Diversification Opportunities for NRG Energy and ATMOS

-0.2

Correlation Coefficient

NRG Energy  ATMOS

Good diversification

The 3 months correlation between NRG and ATMOS is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy 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 NRG 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 NRG Energy 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 NRG Energy i.e., NRG Energy and ATMOS go up and down completely randomly.

Pair Corralation between NRG Energy and ATMOS

Considering the 90-day investment horizon NRG Energy is expected to generate 2.84 times more return on investment than ATMOS. However, NRG Energy is 2.84 times more volatile than ATMOS ENERGY P. It trades about 0.07 of its potential returns per unit of risk. ATMOS ENERGY P is currently generating about -0.26 per unit of risk. If you would invest  8,146  in NRG Energy on September 19, 2024 and sell it today you would earn a total of  735.00  from holding NRG Energy or generate 9.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.88%
Values	Daily Returns

NRG Energy  vs.  ATMOS ENERGY P

NRG Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, NRG Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 NRG Energy and ATMOS

The main advantage of trading using opposite NRG Energy and ATMOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy 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 NRG Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.