Correlation Between River and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both River and Ameren 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 River and Ameren Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between River and Mercantile and Ameren Corp, you can compare the effects of market volatilities on River and Ameren 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 River with a short position of Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of River and Ameren Corp.
Diversification Opportunities for River and Ameren Corp
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between River and Ameren is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and River 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 River and Mercantile are associated (or correlated) with Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of River i.e., River and Ameren Corp go up and down completely randomly.
Pair Corralation between River and Ameren Corp
Assuming the 90 days trading horizon River and Mercantile is expected to under-perform the Ameren Corp. But the stock apears to be less risky and, when comparing its historical volatility, River and Mercantile is 2.07 times less risky than Ameren Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Ameren Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8,934 in Ameren Corp on November 3, 2024 and sell it today you would earn a total of 526.00 from holding Ameren Corp or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
River and Mercantile vs. Ameren Corp
Performance |
| Timeline |
| River and Mercantile |
| Ameren Corp |
River and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with River and Ameren Corp
The main advantage of trading using opposite River and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River position performs unexpectedly, Ameren 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| River vs. Fidelity National Information | River vs. Datalogic | River vs. Creo Medical Group | River vs. Advanced Medical Solutions |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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