Correlation Between ATMOS and Westinghouse Air

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

Diversification Opportunities for ATMOS and Westinghouse Air

-0.57

Correlation Coefficient

ATMOS  Westinghouse Air

Excellent diversification

The 3 months correlation between ATMOS and Westinghouse is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ATMOS ENERGY P and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of ATMOS i.e., ATMOS and Westinghouse Air go up and down completely randomly.

Pair Corralation between ATMOS and Westinghouse Air

Assuming the 90 days trading horizon ATMOS ENERGY P is expected to under-perform the Westinghouse Air. But the bond apears to be less risky and, when comparing its historical volatility, ATMOS ENERGY P is 1.09 times less risky than Westinghouse Air. The bond trades about -0.06 of its potential returns per unit of risk. The Westinghouse Air Brake is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  17,914  in Westinghouse Air Brake on September 21, 2024 and sell it today you would earn a total of  1,042  from holding Westinghouse Air Brake or generate 5.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

ATMOS ENERGY P  vs.  Westinghouse Air Brake

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.

Westinghouse Air Brake

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Westinghouse Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATMOS and Westinghouse Air

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

The idea behind ATMOS ENERGY P and Westinghouse Air Brake 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.