Correlation Between Ameren Corp and American Electric
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and American Electric 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 Ameren Corp and American Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and American Electric Power, you can compare the effects of market volatilities on Ameren Corp and American Electric 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 Ameren Corp with a short position of American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and American Electric.
Diversification Opportunities for Ameren Corp and American Electric
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ameren and American is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power and Ameren Corp 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 Ameren Corp are associated (or correlated) with American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of Ameren Corp i.e., Ameren Corp and American Electric go up and down completely randomly.
Pair Corralation between Ameren Corp and American Electric
Considering the 90-day investment horizon Ameren Corp is expected to generate 0.97 times more return on investment than American Electric. However, Ameren Corp is 1.03 times less risky than American Electric. It trades about 0.21 of its potential returns per unit of risk. American Electric Power is currently generating about 0.02 per unit of risk. If you would invest 8,140 in Ameren Corp on August 23, 2024 and sell it today you would earn a total of 1,257 from holding Ameren Corp or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Corp vs. American Electric Power
Performance |
| Timeline |
| Ameren Corp |
| American Electric Power |
Ameren Corp and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and American Electric
The main advantage of trading using opposite Ameren Corp and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| Ameren Corp vs. Enel Chile SA | Ameren Corp vs. Centrais Eltricas Brasileiras | Ameren Corp vs. Central Puerto SA | Ameren Corp vs. CMS Energy |
| American Electric vs. Southern Company | American Electric vs. Dominion Energy | American Electric vs. Nextera Energy | American Electric vs. Consolidated Edison |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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