Correlation Between Ameren Corp and Xcel Energy
Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Xcel Energy 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 Xcel Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Corp and Xcel Energy, you can compare the effects of market volatilities on Ameren Corp and Xcel Energy 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 Xcel Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Xcel Energy.
Diversification Opportunities for Ameren Corp and Xcel Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ameren and Xcel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of Ameren Corp i.e., Ameren Corp and Xcel Energy go up and down completely randomly.
Pair Corralation between Ameren Corp and Xcel Energy
Considering the 90-day investment horizon Ameren Corp is expected to generate 1.67 times less return on investment than Xcel Energy. In addition to that, Ameren Corp is 1.12 times more volatile than Xcel Energy. It trades about 0.08 of its total potential returns per unit of risk. Xcel Energy is currently generating about 0.16 per unit of volatility. If you would invest 6,688 in Xcel Energy on December 10, 2024 and sell it today you would earn a total of 247.00 from holding Xcel Energy or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Corp vs. Xcel Energy
Performance |
| Timeline |
| Ameren Corp |
| Xcel Energy |
Ameren Corp and Xcel Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Corp and Xcel Energy
The main advantage of trading using opposite Ameren Corp and Xcel Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Xcel Energy 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 Xcel Energy will offset losses from the drop in Xcel Energy's long position.| Ameren Corp vs. CMS Energy | ||
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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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