Correlation Between Now and Atlas Energy

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

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

Diversification Opportunities for Now and Atlas Energy

0.91

Correlation Coefficient

Now  Atlas Energy

Almost no diversification

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

Pair Corralation between Now and Atlas Energy

Given the investment horizon of 90 days Now is expected to generate 1.36 times less return on investment than Atlas Energy. But when comparing it to its historical volatility, Now Inc is 1.2 times less risky than Atlas Energy. It trades about 0.34 of its potential returns per unit of risk. Atlas Energy Solutions is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  1,776  in Atlas Energy Solutions on January 17, 2024 and sell it today you would earn a total of  568.00  from holding Atlas Energy Solutions or generate 31.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.56%
Values	Daily Returns

Now Inc  vs.  Atlas Energy Solutions

Now Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Now showed solid returns over the last few months and may actually be approaching a breakup point.

Atlas Energy Solutions

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Energy Solutions are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Atlas Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Now and Atlas Energy

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

The idea behind Now Inc and Atlas Energy Solutions 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.