Correlation Between Ameren Corp and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Franklin Utilities 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 Franklin Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and Franklin Utilities, you can compare the effects of market volatilities on Ameren Corp and Franklin Utilities 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 Franklin Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Franklin Utilities.
Diversification Opportunities for Ameren Corp and Franklin Utilities
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ameren and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Franklin Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities 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 Franklin Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Ameren Corp i.e., Ameren Corp and Franklin Utilities go up and down completely randomly.
Pair Corralation between Ameren Corp and Franklin Utilities
Considering the 90-day investment horizon Ameren Corp is expected to generate 1.25 times more return on investment than Franklin Utilities. However, Ameren Corp is 1.25 times more volatile than Franklin Utilities. It trades about 0.2 of its potential returns per unit of risk. Franklin Utilities is currently generating about 0.17 per unit of risk. If you would invest 7,250 in Ameren Corp on September 1, 2024 and sell it today you would earn a total of 2,189 from holding Ameren Corp or generate 30.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ameren Corp vs. Franklin Utilities
Performance |
| Timeline |
| Ameren Corp |
| Franklin Utilities |
Ameren Corp and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and Franklin Utilities
The main advantage of trading using opposite Ameren Corp and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Franklin Utilities 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 Franklin Utilities will offset losses from the drop in Franklin Utilities' long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
| Franklin Utilities vs. Federated Ohio Municipal | Franklin Utilities vs. The National Tax Free | Franklin Utilities vs. Nuveen Minnesota Municipal | Franklin Utilities vs. Morningstar Municipal Bond |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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