Correlation Between UGI and Atmos Energy

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

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

Diversification Opportunities for UGI and Atmos Energy

0.75

Correlation Coefficient

UGI  Atmos Energy

Poor diversification

The 3 months correlation between UGI and Atmos is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp. and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and UGI 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 UGI Corporation are associated (or correlated) with Atmos Energy. 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 has no effect on the direction of UGI i.e., UGI and Atmos Energy go up and down completely randomly.

Pair Corralation between UGI and Atmos Energy

Considering the 90-day investment horizon UGI is expected to generate 2.54 times less return on investment than Atmos Energy. In addition to that, UGI is 2.46 times more volatile than Atmos Energy. It trades about 0.02 of its total potential returns per unit of risk. Atmos Energy is currently generating about 0.1 per unit of volatility. If you would invest  11,520  in Atmos Energy on February 5, 2024 and sell it today you would earn a total of  412.00  from holding Atmos Energy or generate 3.58% return on investment over 90 days.

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

UGI Corp.  vs.  Atmos Energy

UGI Corporation

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UGI Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, UGI is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Atmos Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atmos Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Atmos Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with UGI and Atmos Energy

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

The idea behind UGI Corporation and Atmos 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.