Correlation Between CLP Holdings and Ameren Illinois
Can any of the company-specific risk be diversified away by investing in both CLP Holdings and Ameren Illinois 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 CLP Holdings and Ameren Illinois into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CLP Holdings and Ameren Illinois, you can compare the effects of market volatilities on CLP Holdings and Ameren Illinois 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 CLP Holdings with a short position of Ameren Illinois. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLP Holdings and Ameren Illinois.
Diversification Opportunities for CLP Holdings and Ameren Illinois
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CLP and Ameren is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CLP Holdings and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois and CLP Holdings 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 CLP Holdings are associated (or correlated) with Ameren Illinois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Illinois has no effect on the direction of CLP Holdings i.e., CLP Holdings and Ameren Illinois go up and down completely randomly.
Pair Corralation between CLP Holdings and Ameren Illinois
Assuming the 90 days horizon CLP Holdings is expected to generate 3.68 times more return on investment than Ameren Illinois. However, CLP Holdings is 3.68 times more volatile than Ameren Illinois. It trades about 0.0 of its potential returns per unit of risk. Ameren Illinois is currently generating about -0.01 per unit of risk. If you would invest 844.00 in CLP Holdings on September 12, 2024 and sell it today you would earn a total of 0.00 from holding CLP Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CLP Holdings vs. Ameren Illinois
Performance |
| Timeline |
| CLP Holdings |
| Ameren Illinois |
CLP Holdings and Ameren Illinois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CLP Holdings and Ameren Illinois
The main advantage of trading using opposite CLP Holdings and Ameren Illinois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLP Holdings position performs unexpectedly, Ameren Illinois 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 Ameren Illinois will offset losses from the drop in Ameren Illinois' long position.| CLP Holdings vs. Hong Kong and | CLP Holdings vs. Power Assets Holdings | CLP Holdings vs. Swire Pacific | CLP Holdings vs. Sun Hung Kai |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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