Correlation Between Ameren Corp and PPL
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and PPL 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 PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and PPL Corporation, you can compare the effects of market volatilities on Ameren Corp and PPL 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 PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and PPL.
Diversification Opportunities for Ameren Corp and PPL
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ameren and PPL is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation 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 PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Ameren Corp i.e., Ameren Corp and PPL go up and down completely randomly.
Pair Corralation between Ameren Corp and PPL
Considering the 90-day investment horizon Ameren Corp is expected to generate 0.95 times more return on investment than PPL. However, Ameren Corp is 1.05 times less risky than PPL. It trades about 0.18 of its potential returns per unit of risk. PPL Corporation is currently generating about 0.06 per unit of risk. If you would invest 9,417 in Ameren Corp on November 18, 2024 and sell it today you would earn a total of 390.00 from holding Ameren Corp or generate 4.14% 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. PPL Corp.
Performance |
| Timeline |
| Ameren Corp |
| PPL Corporation |
Ameren Corp and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and PPL
The main advantage of trading using opposite Ameren Corp and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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