Correlation Between Ameren Corp and New Fortress
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and New Fortress 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 New Fortress into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and New Fortress Energy, you can compare the effects of market volatilities on Ameren Corp and New Fortress 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 New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and New Fortress.
Diversification Opportunities for Ameren Corp and New Fortress
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ameren and New is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and New Fortress Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Fortress Energy 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 New Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Fortress Energy has no effect on the direction of Ameren Corp i.e., Ameren Corp and New Fortress go up and down completely randomly.
Pair Corralation between Ameren Corp and New Fortress
Considering the 90-day investment horizon Ameren Corp is expected to generate 0.35 times more return on investment than New Fortress. However, Ameren Corp is 2.88 times less risky than New Fortress. It trades about 0.03 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.06 per unit of risk. If you would invest 8,240 in Ameren Corp on August 27, 2024 and sell it today you would earn a total of 1,141 from holding Ameren Corp or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Corp vs. New Fortress Energy
Performance |
| Timeline |
| Ameren Corp |
| New Fortress Energy |
Ameren Corp and New Fortress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and New Fortress
The main advantage of trading using opposite Ameren Corp and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, New Fortress 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 New Fortress will offset losses from the drop in New Fortress' long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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