Correlation Between Alliant Energy and Reservoir Media
Can any of the company-specific risk be diversified away by investing in both Alliant Energy and Reservoir Media 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 Reservoir Media 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 Reservoir Media, you can compare the effects of market volatilities on Alliant Energy and Reservoir Media 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 Reservoir Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Reservoir Media.
Diversification Opportunities for Alliant Energy and Reservoir Media
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Reservoir is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media 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 Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of Alliant Energy i.e., Alliant Energy and Reservoir Media go up and down completely randomly.
Pair Corralation between Alliant Energy and Reservoir Media
Considering the 90-day investment horizon Alliant Energy is expected to generate 2.37 times less return on investment than Reservoir Media. But when comparing it to its historical volatility, Alliant Energy Corp is 1.23 times less risky than Reservoir Media. It trades about 0.16 of its potential returns per unit of risk. Reservoir Media is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Reservoir Media on September 1, 2024 and sell it today you would earn a total of 111.00 from holding Reservoir Media or generate 13.33% 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. Reservoir Media
Performance |
| Timeline |
| Alliant Energy Corp |
| Reservoir Media |
Alliant Energy and Reservoir Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Reservoir Media
The main advantage of trading using opposite Alliant Energy and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy position performs unexpectedly, Reservoir Media 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 Reservoir Media will offset losses from the drop in Reservoir Media's long position.| Alliant Energy vs. MGE Energy | Alliant Energy vs. CMS Energy | Alliant Energy vs. OGE Energy | Alliant Energy vs. DTE Energy |
| Reservoir Media vs. ADTRAN Inc | Reservoir Media vs. Belden Inc | Reservoir Media vs. ADC Therapeutics SA | Reservoir Media vs. Comtech Telecommunications Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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