Correlation Between Fiat Chrysler and Alliant Energy

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

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

Diversification Opportunities for Fiat Chrysler and Alliant Energy

0.0

Correlation Coefficient

Fiat Chrysler  Alliant Energy

Pay attention - limited upside

The 3 months correlation between Fiat and Alliant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fiat Chrysler Automobiles 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 Fiat Chrysler 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 Fiat Chrysler Automobiles 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 Fiat Chrysler i.e., Fiat Chrysler and Alliant Energy go up and down completely randomly.

Pair Corralation between Fiat Chrysler and Alliant Energy

If you would invest  4,865  in Alliant Energy Corp on February 4, 2024 and sell it today you would earn a total of  220.00  from holding Alliant Energy Corp or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fiat Chrysler Automobiles  vs.  Alliant Energy Corp

Fiat Chrysler Automobiles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiat Chrysler Automobiles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fiat Chrysler is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Alliant Energy Corp

Risk-Adjusted Performance

8 of 100

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 June 2024.

Pair Trading with Fiat Chrysler and Alliant Energy

The main advantage of trading using opposite Fiat Chrysler and Alliant Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiat Chrysler 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 Fiat Chrysler Automobiles 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.