Correlation Between Ameren Corp and Pinnacle West
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Pinnacle West 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 Pinnacle West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and Pinnacle West Capital, you can compare the effects of market volatilities on Ameren Corp and Pinnacle West 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 Pinnacle West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Pinnacle West.
Diversification Opportunities for Ameren Corp and Pinnacle West
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameren and Pinnacle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Pinnacle West Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle West Capital 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 Pinnacle West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle West Capital has no effect on the direction of Ameren Corp i.e., Ameren Corp and Pinnacle West go up and down completely randomly.
Pair Corralation between Ameren Corp and Pinnacle West
Considering the 90-day investment horizon Ameren Corp is expected to generate 1.09 times more return on investment than Pinnacle West. However, Ameren Corp is 1.09 times more volatile than Pinnacle West Capital. It trades about 0.2 of its potential returns per unit of risk. Pinnacle West Capital is currently generating about 0.22 per unit of risk. If you would invest 8,812 in Ameren Corp on August 27, 2024 and sell it today you would earn a total of 569.00 from holding Ameren Corp or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Corp vs. Pinnacle West Capital
Performance |
| Timeline |
| Ameren Corp |
| Pinnacle West Capital |
Ameren Corp and Pinnacle West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and Pinnacle West
The main advantage of trading using opposite Ameren Corp and Pinnacle West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Pinnacle West 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 Pinnacle West will offset losses from the drop in Pinnacle West's long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
| Pinnacle West vs. CMS Energy | Pinnacle West vs. Ameren Corp | Pinnacle West vs. MGE Energy | Pinnacle West vs. Evergy, |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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