Correlation Between United Homes and Ameren Illinois
Can any of the company-specific risk be diversified away by investing in both United Homes 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 United Homes and Ameren Illinois into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Homes Group and Ameren Illinois, you can compare the effects of market volatilities on United Homes 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 United Homes with a short position of Ameren Illinois. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Homes and Ameren Illinois.
Diversification Opportunities for United Homes and Ameren Illinois
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Ameren is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Homes Group and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois and United Homes 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 United Homes Group 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 United Homes i.e., United Homes and Ameren Illinois go up and down completely randomly.
Pair Corralation between United Homes and Ameren Illinois
Considering the 90-day investment horizon United Homes is expected to generate 1.67 times less return on investment than Ameren Illinois. In addition to that, United Homes is 1.9 times more volatile than Ameren Illinois. It trades about 0.02 of its total potential returns per unit of risk. Ameren Illinois is currently generating about 0.07 per unit of volatility. If you would invest 6,386 in Ameren Illinois on November 3, 2024 and sell it today you would earn a total of 164.00 from holding Ameren Illinois or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
United Homes Group vs. Ameren Illinois
Performance |
| Timeline |
| United Homes Group |
| Ameren Illinois |
United Homes and Ameren Illinois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Homes and Ameren Illinois
The main advantage of trading using opposite United Homes and Ameren Illinois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Homes 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.| United Homes vs. Snap On | United Homes vs. United Airlines Holdings | United Homes vs. Hafnia Limited | United Homes vs. Nike Inc |
| Ameren Illinois vs. Netflix | Ameren Illinois vs. PowerFleet, | Ameren Illinois vs. Protara Therapeutics | Ameren Illinois vs. Alphabet Inc Class C |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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