Correlation Between Ameren Illinois and Rightsmile

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

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

Diversification Opportunities for Ameren Illinois and Rightsmile

0.0

Correlation Coefficient

Ameren Illinois  Rightsmile

Pay attention - limited upside

The 3 months correlation between Ameren and Rightsmile is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Illinois and Rightsmile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rightsmile and Ameren Illinois 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 Illinois are associated (or correlated) with Rightsmile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rightsmile has no effect on the direction of Ameren Illinois i.e., Ameren Illinois and Rightsmile go up and down completely randomly.

Pair Corralation between Ameren Illinois and Rightsmile

If you would invest  7,581  in Ameren Illinois on December 30, 2024 and sell it today you would earn a total of  319.00  from holding Ameren Illinois or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ameren Illinois  vs.  Rightsmile

Ameren Illinois

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Illinois are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Ameren Illinois is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Rightsmile

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rightsmile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Rightsmile is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ameren Illinois and Rightsmile

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

The idea behind Ameren Illinois and Rightsmile 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.