American Electric Correlations

AEP Stock

USD 97.25 0.43 0.44%

The current 90-days correlation between American Electric Power and Southern Company is 0.72 (i.e., Poor diversification). The correlation of American Electric is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak. If the correlation is 0, the equities are not correlated; they are entirely random.

American Electric Correlation With Market

Modest diversification

The correlation between American Electric Power and DJI is 0.27 (i.e., Modest diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding American Electric Power and DJI in the same portfolio, assuming nothing else is changed.

Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in American Electric Power. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in income.

Moving together with American Stock

0.89	D	Dominion Energy	Pair Corr
0.88	ED	Consolidated Edison	Pair Corr
0.7	ES	Eversource Energy	Pair Corr
0.85	FE	FirstEnergy	Pair Corr
0.87	SO	Southern	Pair Corr
0.7	CMS-PC	CMS Energy	Pair Corr
0.85	CMS	CMS Energy	Pair Corr
0.71	DTE	DTE Energy	Pair Corr
0.9	DUK	Duke Energy	Pair Corr
0.82	EXC	Exelon	Pair Corr
0.8	NEE	Nextera Energy Earnings Call This Week	Pair Corr
0.64	NGG	National Grid PLC	Pair Corr
0.65	NWE	NorthWestern	Pair Corr
0.69	PEG	Public Service Enterprise	Pair Corr
0.74	POR	Portland General Electric Sell-off Trend	Pair Corr
0.73	WEC	WEC Energy Group	Pair Corr

Moving against American Stock

0.68	EDN	Empresa Distribuidora	Pair Corr
0.51	ENIC	Enel Chile SA	Pair Corr
0.39	ETR	Entergy	Pair Corr
0.31	CNP	CenterPoint Energy	Pair Corr
0.68	PCG-PI	Pacific Gas	Pair Corr
0.65	PCG-PC	Pacific Gas	Pair Corr
0.59	CEPU	Central Puerto SA	Pair Corr
0.37	VIASP	Via Renewables	Pair Corr
0.34	SCE-PJ	SCE Trust IV	Pair Corr

Related Correlations Analysis

	SO	D	NEE	ED	DUK	EIX	FE	ETR	XEL
SO		0.97	0.94	0.98	0.95	0.6	0.98	-0.65	0.0	SO
D	0.97		0.9	0.95	0.94	0.59	0.95	-0.54	0.05	D
NEE	0.94	0.9		0.95	0.94	0.7	0.96	-0.75	-0.02	NEE
ED	0.98	0.95	0.95		0.95	0.6	0.98	-0.69	-0.01	ED
DUK	0.95	0.94	0.94	0.95		0.66	0.96	-0.56	0.17	DUK
EIX	0.6	0.59	0.7	0.6	0.66		0.67	-0.45	0.43	EIX
FE	0.98	0.95	0.96	0.98	0.96	0.67		-0.67	0.07	FE
ETR	-0.65	-0.54	-0.75	-0.69	-0.56	-0.45	-0.67		0.49	ETR
XEL	0.0	0.05	-0.02	-0.01	0.17	0.43	0.07	0.49		XEL
	SO	D	NEE	ED	DUK	EIX	FE	ETR	XEL

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Correlation Matchups

Over a given time period, the two securities move together when the Correlation Coefficient is positive. Conversely, the two assets move in opposite directions when the Correlation Coefficient is negative. Determining your positions' relationship to each other is valuable for analyzing and projecting your portfolio's future expected return and risk.

High positive correlations

ED	+ 0.98	SO
FE	+ 0.98	SO
FE	+ 0.98	ED
D	+ 0.97	SO
FE	+ 0.96	NEE
FE	+ 0.96	DUK

High negative correlations

ETR	- 0.75	NEE
ETR	- 0.69	ED
ETR	- 0.67	FE
ETR	- 0.65	SO
ETR	- 0.56	DUK
ETR	- 0.54	D

Risk-Adjusted Indicators

There is a big difference between American Stock performing well and American Electric Company doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze American Electric's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

	Mean Deviation	Jensen Alpha	Sortino Ratio	Treynor Ratio	Semi Deviation	Expected Shortfall	Potential Upside	Value @Risk	Maximum Drawdown
SO	0.87	(0.10)	0.00	(0.40)	0.00	0.00	1.86	(2.05)	4.59
D	1.02	(0.03)	0.00	(0.08)	0.00	0.00	2.04	(2.31)	7.68
NEE	1.17	(0.24)	0.00	(0.44)	0.00	0.00	1.93	(2.52)	7.80
ED	0.82	(0.14)	0.00	(0.44)	0.00	0.00	1.60	(2.05)	4.57
DUK	0.86	(0.08)	0.00	(0.17)	0.00	0.00	1.94	(2.18)	4.54
EIX	1.38	(0.42)	0.00	(0.98)	0.00	0.00	2.03	(2.79)	13.93
FE	0.71	(0.12)	0.00	(0.40)	0.00	0.00	1.17	(1.76)	4.31
ETR	1.13	0.36	0.20	0.56	1.28	(1.24)	2.26	(1.85)	21.63
XEL	0.90	0.09	0.06	0.22	1.20	(0.94)	1.90	(1.77)	10.51

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