Correlation Between Ameren Corp and Prudential Utility
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Prudential Utility 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 Prudential Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and Prudential Utility Fund, you can compare the effects of market volatilities on Ameren Corp and Prudential Utility 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 Prudential Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Prudential Utility.
Diversification Opportunities for Ameren Corp and Prudential Utility
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ameren and Prudential is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Utility 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 Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of Ameren Corp i.e., Ameren Corp and Prudential Utility go up and down completely randomly.
Pair Corralation between Ameren Corp and Prudential Utility
Considering the 90-day investment horizon Ameren Corp is expected to generate 1.13 times more return on investment than Prudential Utility. However, Ameren Corp is 1.13 times more volatile than Prudential Utility Fund. It trades about 0.2 of its potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.15 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. Prudential Utility Fund
Performance |
| Timeline |
| Ameren Corp |
| Prudential Utility |
Ameren Corp and Prudential Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and Prudential Utility
The main advantage of trading using opposite Ameren Corp and Prudential Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Prudential Utility 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 Prudential Utility will offset losses from the drop in Prudential Utility's long position.| Ameren Corp vs. CMS Energy | Ameren Corp vs. Pinnacle West Capital | Ameren Corp vs. MGE Energy | Ameren Corp vs. Evergy, |
| Prudential Utility vs. Prudential Health Sciences | Prudential Utility vs. Pgim Jennison Natural | Prudential Utility vs. Prudential Utility Fund | Prudential Utility vs. Prudential Utility Fund |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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