Correlation Between Ameren Illinois and PGE Corp
Can any of the company-specific risk be diversified away by investing in both Ameren Illinois and PGE Corp 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 Illinois and PGE Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ameren Illinois and PGE Corp, you can compare the effects of market volatilities on Ameren Illinois and PGE Corp 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 Illinois with a short position of PGE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Illinois and PGE Corp.
Diversification Opportunities for Ameren Illinois and PGE Corp
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ameren and PGE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Illinois and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp and Ameren Illinois 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 Illinois are associated (or correlated) with PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Ameren Illinois i.e., Ameren Illinois and PGE Corp go up and down completely randomly.
Pair Corralation between Ameren Illinois and PGE Corp
Assuming the 90 days horizon Ameren Illinois is expected to generate 4.35 times less return on investment than PGE Corp. In addition to that, Ameren Illinois is 1.37 times more volatile than PGE Corp. It trades about 0.02 of its total potential returns per unit of risk. PGE Corp is currently generating about 0.13 per unit of volatility. If you would invest 1,820 in PGE Corp on September 3, 2024 and sell it today you would earn a total of 343.00 from holding PGE Corp or generate 18.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ameren Illinois vs. PGE Corp
Performance |
| Timeline |
| Ameren Illinois |
| PGE Corp |
Ameren Illinois and PGE Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ameren Illinois and PGE Corp
The main advantage of trading using opposite Ameren Illinois and PGE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Illinois position performs unexpectedly, PGE Corp 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 PGE Corp will offset losses from the drop in PGE Corp's long position.| Ameren Illinois vs. Tat Techno | Ameren Illinois vs. Apple Inc | Ameren Illinois vs. MGM Resorts International | Ameren Illinois vs. ATT Inc |
| PGE Corp vs. Consolidated Edison | PGE Corp vs. Southern Company | PGE Corp vs. Entergy | PGE Corp vs. Pinnacle West Capital |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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