Correlation Between AES and Allete
Can any of the company-specific risk be diversified away by investing in both AES and Allete 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 AES and Allete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The AES and Allete Inc, you can compare the effects of market volatilities on AES and Allete 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 AES with a short position of Allete. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and Allete.
Diversification Opportunities for AES and Allete
Excellent diversification
The 3 months correlation between AES and Allete is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The AES and Allete Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allete Inc and AES 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 The AES are associated (or correlated) with Allete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allete Inc has no effect on the direction of AES i.e., AES and Allete go up and down completely randomly.
Pair Corralation between AES and Allete
Considering the 90-day investment horizon The AES is expected to under-perform the Allete. In addition to that, AES is 7.68 times more volatile than Allete Inc. It trades about -0.33 of its total potential returns per unit of risk. Allete Inc is currently generating about 0.24 per unit of volatility. If you would invest 6,359 in Allete Inc on August 27, 2024 and sell it today you would earn a total of 141.00 from holding Allete Inc or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The AES vs. Allete Inc
Performance |
| Timeline |
| AES |
| Allete Inc |
AES and Allete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES and Allete
The main advantage of trading using opposite AES and Allete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES position performs unexpectedly, Allete 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 Allete will offset losses from the drop in Allete's long position.The idea behind The AES and Allete Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Allete vs. Avista | Allete vs. Black Hills | Allete vs. Montauk Renewables | Allete vs. Companhia Paranaense de |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |