Correlation Between Atmos Energy and CenterPoint Energy

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

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

Diversification Opportunities for Atmos Energy and CenterPoint Energy

0.91

Correlation Coefficient

Atmos Energy  CenterPoint Energy

Almost no diversification

The 3 months correlation between Atmos and CenterPoint is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Atmos Energy and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and Atmos 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 Atmos Energy are associated (or correlated) with CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Atmos Energy i.e., Atmos Energy and CenterPoint Energy go up and down completely randomly.

Pair Corralation between Atmos Energy and CenterPoint Energy

Assuming the 90 days horizon Atmos Energy is expected to generate 0.72 times more return on investment than CenterPoint Energy. However, Atmos Energy is 1.39 times less risky than CenterPoint Energy. It trades about -0.04 of its potential returns per unit of risk. CenterPoint Energy is currently generating about -0.04 per unit of risk. If you would invest  14,007  in Atmos Energy on April 25, 2025 and sell it today you would lose (482.00) from holding Atmos Energy or give up 3.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Atmos Energy  vs.  CenterPoint Energy

Atmos Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atmos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Atmos Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CenterPoint Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CenterPoint Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CenterPoint Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Atmos Energy and CenterPoint Energy

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

The idea behind Atmos Energy and CenterPoint 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.