Correlation Between Ameren Corp and Empresa Distribuidora

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

By analyzing existing cross correlation between Ameren Corp and Empresa Distribuidora y, you can compare the effects of market volatilities on Ameren Corp and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameren Corp and Empresa Distribuidora.

Diversification Opportunities for Ameren Corp and Empresa Distribuidora

-0.59

Correlation Coefficient

Ameren Corp  Empresa Distribuidora

Excellent diversification

The 3 months correlation between Ameren and Empresa is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Ameren Corp i.e., Ameren Corp and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Ameren Corp and Empresa Distribuidora

Considering the 90-day investment horizon Ameren Corp is expected to generate 0.26 times more return on investment than Empresa Distribuidora. However, Ameren Corp is 3.8 times less risky than Empresa Distribuidora. It trades about 0.31 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.0 per unit of risk. If you would invest  9,413  in Ameren Corp on November 28, 2024 and sell it today you would earn a total of  520.00  from holding Ameren Corp or generate 5.52% return on investment over 90 days.

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

Ameren Corp  vs.  Empresa Distribuidora y

Ameren Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 7 (%) 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 March 2025.

Empresa Distribuidora

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empresa Distribuidora y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Empresa Distribuidora is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ameren Corp and Empresa Distribuidora

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

The idea behind Ameren Corp and Empresa Distribuidora y 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.