Correlation Between Alliant Energy and Transportadora
Can any of the company-specific risk be diversified away by investing in both Alliant Energy and Transportadora 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 Transportadora 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 Transportadora de Gas, you can compare the effects of market volatilities on Alliant Energy and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Transportadora.
Diversification Opportunities for Alliant Energy and Transportadora
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Transportadora is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Alliant Energy i.e., Alliant Energy and Transportadora go up and down completely randomly.
Pair Corralation between Alliant Energy and Transportadora
Considering the 90-day investment horizon Alliant Energy is expected to generate 3.07 times less return on investment than Transportadora. But when comparing it to its historical volatility, Alliant Energy Corp is 2.91 times less risky than Transportadora. It trades about 0.1 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,509 in Transportadora de Gas on August 25, 2024 and sell it today you would earn a total of 1,469 from holding Transportadora de Gas or generate 97.35% 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. Transportadora de Gas
Performance |
| Timeline |
| Alliant Energy Corp |
| Transportadora de Gas |
Alliant Energy and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Transportadora
The main advantage of trading using opposite Alliant Energy and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Alliant Energy vs. Dominion Energy | Alliant Energy vs. Consolidated Edison | Alliant Energy vs. Eversource Energy | Alliant Energy vs. FirstEnergy |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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