Correlation Between ATMOS and Ecolab

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

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

Diversification Opportunities for ATMOS and Ecolab

-0.07

Correlation Coefficient

ATMOS  Ecolab

Good diversification

The 3 months correlation between ATMOS and Ecolab is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ATMOS ENERGY P and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and ATMOS 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 ATMOS ENERGY P are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of ATMOS i.e., ATMOS and Ecolab go up and down completely randomly.

Pair Corralation between ATMOS and Ecolab

Assuming the 90 days trading horizon ATMOS ENERGY P is expected to generate 57.46 times more return on investment than Ecolab. However, ATMOS is 57.46 times more volatile than Ecolab Inc. It trades about 0.06 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.09 per unit of risk. If you would invest  8,754  in ATMOS ENERGY P on September 28, 2024 and sell it today you would lose (145.00) from holding ATMOS ENERGY P or give up 1.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.61%
Values	Daily Returns

ATMOS ENERGY P  vs.  Ecolab Inc

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 latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ATMOS ENERGY P investors.

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ATMOS and Ecolab

The main advantage of trading using opposite ATMOS and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATMOS position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.

The idea behind ATMOS ENERGY P and Ecolab Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.