Correlation Between Centrais Electricas and Ameren Corp

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

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

Diversification Opportunities for Centrais Electricas and Ameren Corp

-0.56

Correlation Coefficient

Centrais Electricas  Ameren Corp

Excellent diversification

The 3 months correlation between Centrais and Ameren is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Centrais Electricas Brasileira and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and Centrais Electricas 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 Centrais Electricas Brasileiras 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 Centrais Electricas i.e., Centrais Electricas and Ameren Corp go up and down completely randomly.

Pair Corralation between Centrais Electricas and Ameren Corp

Considering the 90-day investment horizon Centrais Electricas Brasileiras is expected to under-perform the Ameren Corp. In addition to that, Centrais Electricas is 2.06 times more volatile than Ameren Corp. It trades about -0.08 of its total potential returns per unit of risk. Ameren Corp is currently generating about -0.06 per unit of volatility. If you would invest  9,057  in Ameren Corp on October 11, 2024 and sell it today you would lose (133.00) from holding Ameren Corp or give up 1.47% of portfolio value over 90 days.

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

Centrais Electricas Brasileira  vs.  Ameren Corp

Centrais Electricas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centrais Electricas Brasileiras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ameren Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Ameren Corp is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Centrais Electricas and Ameren Corp

The main advantage of trading using opposite Centrais Electricas and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrais Electricas 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.

The idea behind Centrais Electricas Brasileiras and Ameren Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.