Correlation Between Engie Brasil and Ameren Corp

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

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

Diversification Opportunities for Engie Brasil and Ameren Corp

-0.53

Correlation Coefficient

Engie Brasil  Ameren Corp

Excellent diversification

The 3 months correlation between Engie and Ameren is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and Engie Brasil 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 Engie Brasil Energia 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 Engie Brasil i.e., Engie Brasil and Ameren Corp go up and down completely randomly.

Pair Corralation between Engie Brasil and Ameren Corp

Assuming the 90 days horizon Engie Brasil is expected to generate 2.86 times less return on investment than Ameren Corp. In addition to that, Engie Brasil is 2.14 times more volatile than Ameren Corp. It trades about 0.0 of its total potential returns per unit of risk. Ameren Corp is currently generating about 0.02 per unit of volatility. If you would invest  8,122  in Ameren Corp on October 11, 2024 and sell it today you would earn a total of  802.00  from holding Ameren Corp or generate 9.87% return on investment over 90 days.

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

Engie Brasil Energia  vs.  Ameren Corp

Engie Brasil Energia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie Brasil Energia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Engie Brasil and Ameren Corp

The main advantage of trading using opposite Engie Brasil and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil 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 Engie Brasil Energia 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.