Correlation Between Ameren Corp and Duke Energy

Can any of the company-specific risk be diversified away by investing in both Ameren Corp and Duke Energy 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 Ameren Corp and Duke Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ameren Corp and Duke Energy, you can compare the effects of market volatilities on Ameren Corp and Duke Energy 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 Ameren Corp with a short position of Duke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Duke Energy.

Diversification Opportunities for Ameren Corp and Duke Energy

0.94

Correlation Coefficient

Ameren Corp  Duke Energy

Almost no diversification

The 3 months correlation between Ameren and Duke is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Duke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duke Energy and Ameren Corp 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 Ameren Corp are associated (or correlated) with Duke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duke Energy has no effect on the direction of Ameren Corp i.e., Ameren Corp and Duke Energy go up and down completely randomly.

Pair Corralation between Ameren Corp and Duke Energy

Considering the 90-day investment horizon Ameren Corp is expected to generate 1.03 times less return on investment than Duke Energy. In addition to that, Ameren Corp is 1.11 times more volatile than Duke Energy. It trades about 0.13 of its total potential returns per unit of risk. Duke Energy is currently generating about 0.15 per unit of volatility. If you would invest  10,797  in Duke Energy on December 24, 2024 and sell it today you would earn a total of  1,113  from holding Duke Energy or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Ameren Corp  vs.  Duke Energy

Ameren Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ameren Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Duke Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Duke Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Duke Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ameren Corp and Duke Energy

The main advantage of trading using opposite Ameren Corp and Duke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameren Corp position performs unexpectedly, Duke Energy 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 Duke Energy will offset losses from the drop in Duke Energy's long position.

The idea behind Ameren Corp and Duke Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.