Correlation Between Ameren Corp and Via Renewables

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

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

Diversification Opportunities for Ameren Corp and Via Renewables

-0.23

Correlation Coefficient

Ameren Corp  Via Renewables

Very good diversification

The 3 months correlation between Ameren and Via is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Ameren Corp 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 Corp are associated (or correlated) with Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Ameren Corp i.e., Ameren Corp and Via Renewables go up and down completely randomly.

Pair Corralation between Ameren Corp and Via Renewables

Considering the 90-day investment horizon Ameren Corp is expected to generate 1.44 times less return on investment than Via Renewables. But when comparing it to its historical volatility, Ameren Corp is 1.36 times less risky than Via Renewables. It trades about 0.41 of its potential returns per unit of risk. Via Renewables is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  1,990  in Via Renewables on June 13, 2024 and sell it today you would earn a total of  174.00  from holding Via Renewables or generate 8.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ameren Corp  vs.  Via Renewables

Ameren Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ameren Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Via Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Via Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ameren Corp and Via Renewables

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

The idea behind Ameren Corp and Via Renewables 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.