Correlation Between Transportadora and Alliant Energy

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

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

Diversification Opportunities for Transportadora and Alliant Energy

0.57

Correlation Coefficient

Transportadora  Alliant Energy

Very weak diversification

The 3 months correlation between Transportadora and Alliant is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp and Transportadora 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 Transportadora de Gas are associated (or correlated) with Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of Transportadora i.e., Transportadora and Alliant Energy go up and down completely randomly.

Pair Corralation between Transportadora and Alliant Energy

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 2.23 times more return on investment than Alliant Energy. However, Transportadora is 2.23 times more volatile than Alliant Energy Corp. It trades about 0.21 of its potential returns per unit of risk. Alliant Energy Corp is currently generating about 0.02 per unit of risk. If you would invest  2,131  in Transportadora de Gas on September 14, 2024 and sell it today you would earn a total of  886.00  from holding Transportadora de Gas or generate 41.58% return on investment over 90 days.

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

Transportadora de Gas  vs.  Alliant Energy Corp

Transportadora de Gas

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alliant Energy Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alliant Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alliant Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Transportadora and Alliant Energy

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

The idea behind Transportadora de Gas and Alliant Energy 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.