Correlation Between ATMOS and Grocery Outlet

Can any of the company-specific risk be diversified away by investing in both ATMOS and Grocery Outlet 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 Grocery Outlet 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 Grocery Outlet Holding, you can compare the effects of market volatilities on ATMOS and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATMOS and Grocery Outlet.

Diversification Opportunities for ATMOS and Grocery Outlet

-0.16

Correlation Coefficient

ATMOS  Grocery Outlet

Good diversification

The 3 months correlation between ATMOS and Grocery is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding ATMOS ENERGY P and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of ATMOS i.e., ATMOS and Grocery Outlet go up and down completely randomly.

Pair Corralation between ATMOS and Grocery Outlet

Assuming the 90 days trading horizon ATMOS ENERGY P is expected to generate 0.28 times more return on investment than Grocery Outlet. However, ATMOS ENERGY P is 3.59 times less risky than Grocery Outlet. It trades about -0.04 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.03 per unit of risk. If you would invest  8,853  in ATMOS ENERGY P on September 30, 2024 and sell it today you would lose (253.00) from holding ATMOS ENERGY P or give up 2.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

ATMOS ENERGY P  vs.  Grocery Outlet Holding

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 current stock price disturbance, may contribute to short-term losses for the investors.

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ATMOS and Grocery Outlet

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

The idea behind ATMOS ENERGY P and Grocery Outlet Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.