Correlation Between Alliant Energy and Ameren Corp

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

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

Diversification Opportunities for Alliant Energy and Ameren Corp

0.93

Correlation Coefficient

Alliant Energy  Ameren Corp

Almost no diversification

The 3 months correlation between Alliant and Ameren is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and Alliant Energy 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 Alliant Energy Corp 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 Alliant Energy i.e., Alliant Energy and Ameren Corp go up and down completely randomly.

Pair Corralation between Alliant Energy and Ameren Corp

Considering the 90-day investment horizon Alliant Energy is expected to generate 1.44 times less return on investment than Ameren Corp. But when comparing it to its historical volatility, Alliant Energy Corp is 1.05 times less risky than Ameren Corp. It trades about 0.11 of its potential returns per unit of risk. Ameren Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8,898  in Ameren Corp on December 28, 2024 and sell it today you would earn a total of  1,072  from holding Ameren Corp or generate 12.05% return on investment over 90 days.

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

Alliant Energy Corp  vs.  Ameren Corp

Alliant Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alliant Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alliant Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ameren Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Ameren Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alliant Energy and Ameren Corp

The main advantage of trading using opposite Alliant Energy and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy 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 Alliant Energy Corp 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 CEOs Directory module to screen CEOs from public companies around the world.