Correlation Between Vortex Brands and Ameren Illinois

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

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

Diversification Opportunities for Vortex Brands and Ameren Illinois

0.51

Correlation Coefficient

Vortex Brands  Ameren Illinois

Very weak diversification

The 3 months correlation between Vortex and Ameren is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vortex Brands Co and Ameren Illinois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Illinois and Vortex Brands 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 Vortex Brands Co are associated (or correlated) with Ameren Illinois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Illinois has no effect on the direction of Vortex Brands i.e., Vortex Brands and Ameren Illinois go up and down completely randomly.

Pair Corralation between Vortex Brands and Ameren Illinois

Given the investment horizon of 90 days Vortex Brands Co is expected to under-perform the Ameren Illinois. In addition to that, Vortex Brands is 18.45 times more volatile than Ameren Illinois. It trades about -0.02 of its total potential returns per unit of risk. Ameren Illinois is currently generating about -0.01 per unit of volatility. If you would invest  6,650  in Ameren Illinois on March 8, 2024 and sell it today you would lose (50.00) from holding Ameren Illinois or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Vortex Brands Co  vs.  Ameren Illinois

Vortex Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vortex Brands Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Ameren Illinois

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vortex Brands and Ameren Illinois

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

The idea behind Vortex Brands Co and Ameren Illinois 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.