Correlation Between Ameren Corp and Allete
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Allete 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 Allete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and Allete Inc, you can compare the effects of market volatilities on Ameren Corp and Allete 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 Allete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Allete.
Diversification Opportunities for Ameren Corp and Allete
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ameren and Allete is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc 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 Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of Ameren Corp i.e., Ameren Corp and Allete go up and down completely randomly.
Pair Corralation between Ameren Corp and Allete
Considering the 90-day investment horizon Ameren Corp is expected to generate 1.25 times less return on investment than Allete. In addition to that, Ameren Corp is 1.04 times more volatile than Allete Inc. It trades about 0.02 of its total potential returns per unit of risk. Allete Inc is currently generating about 0.03 per unit of volatility. If you would invest 5,771 in Allete Inc on August 27, 2024 and sell it today you would earn a total of 722.00 from holding Allete Inc or generate 12.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Corp vs. Allete Inc
Performance |
| Timeline |
| Ameren Corp |
| Allete Inc |
Ameren Corp and Allete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and Allete
The main advantage of trading using opposite Ameren Corp and Allete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Allete 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 Allete will offset losses from the drop in Allete's long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete vs. Companhia Paranaense de |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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