Correlation Between Northwest Natural and Atmos Energy

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

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

Diversification Opportunities for Northwest Natural and Atmos Energy

0.83

Correlation Coefficient

Northwest Natural  Atmos Energy

Very poor diversification

The 3 months correlation between Northwest and Atmos is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Natural Gas and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Northwest Natural 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 Northwest Natural Gas 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 Northwest Natural i.e., Northwest Natural and Atmos Energy go up and down completely randomly.

Pair Corralation between Northwest Natural and Atmos Energy

Considering the 90-day investment horizon Northwest Natural Gas is expected to under-perform the Atmos Energy. In addition to that, Northwest Natural is 1.25 times more volatile than Atmos Energy. It trades about -0.09 of its total potential returns per unit of risk. Atmos Energy is currently generating about -0.02 per unit of volatility. If you would invest  16,176  in Atmos Energy on May 7, 2025 and sell it today you would lose (231.00) from holding Atmos Energy or give up 1.43% of portfolio value over 90 days.

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

Northwest Natural Gas  vs.  Atmos Energy

Northwest Natural Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northwest Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

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. In spite of very healthy basic indicators, Atmos Energy is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Northwest Natural and Atmos Energy

The main advantage of trading using opposite Northwest Natural and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Natural 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 Northwest Natural Gas 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.