Correlation Between Alliant Energy and Plexus Corp
Can any of the company-specific risk be diversified away by investing in both Alliant Energy and Plexus 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 Alliant Energy and Plexus Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Plexus Corp, you can compare the effects of market volatilities on Alliant Energy and Plexus 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 Alliant Energy with a short position of Plexus Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Plexus Corp.
Diversification Opportunities for Alliant Energy and Plexus Corp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Plexus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Plexus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plexus Corp and Alliant Energy 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 Alliant Energy Corp are associated (or correlated) with Plexus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plexus Corp has no effect on the direction of Alliant Energy i.e., Alliant Energy and Plexus Corp go up and down completely randomly.
Pair Corralation between Alliant Energy and Plexus Corp
Considering the 90-day investment horizon Alliant Energy is expected to generate 2.13 times less return on investment than Plexus Corp. But when comparing it to its historical volatility, Alliant Energy Corp is 1.7 times less risky than Plexus Corp. It trades about 0.09 of its potential returns per unit of risk. Plexus Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,091 in Plexus Corp on September 2, 2024 and sell it today you would earn a total of 6,349 from holding Plexus Corp or generate 62.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliant Energy Corp vs. Plexus Corp
Performance |
| Timeline |
| Alliant Energy Corp |
| Plexus Corp |
Alliant Energy and Plexus Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Plexus Corp
The main advantage of trading using opposite Alliant Energy and Plexus Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy position performs unexpectedly, Plexus 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 Plexus Corp will offset losses from the drop in Plexus Corp's long position.| Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. Pinnacle West Capital |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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