American Story

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AEP -- USA Stock  

USD 85.37  0.55  0.65%

It appears that American Electric may not recover as fast as we have hopped for as its price went down 0.35% today. American Electric's current daily volatility is 1.24 percent, with a beta of -0.05 and an alpha of 0.06 over DOW. While many traders are getting carried away by overanalyzing market volatility, it is reasonable to recap American Electric Power based on how it reacts to the recent economic swings. Why are we still confident in our projection for a recovery.
Published over a month ago
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Should you trade American Electric Power after the recent volatility decline?
American Electric Power has roughly 541.1 M in cash with 4.22 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 1.09. Macroaxis provides advice on American Electric Power to complement and cross-verify current analyst consensus on American Electric Power. Our investment recommendation engine determines the company's potential to grow exclusively from the perspective of an investor's current risk tolerance and investing horizon.
Investing in American Electric, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding American Electric along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.

How important is American Electric's Liquidity

American Electric financial leverage refers to using borrowed capital as a funding source to finance American Electric Power ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. American Electric financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between American Electric's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for American Electric, but it might be worth checking our own buy vs. sell analysis

American Electric Correlation with Peers

Investors in American can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in American Electric Power. Diversification will allow for the same portfolio return with reduced risk. The correlation table of American Electric and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities American is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of American for more details

Breaking down the case for American Electric

We consider American Electric very steady. American Electric Power secures Sharpe Ratio (or Efficiency) of 0.13, which signifies that the company had 0.13% of return per unit of standard deviation over the last month. Our philosophy in foreseeing the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for American Electric Power, which you can use to evaluate future volatility of the firm. Please confirm American Electric Power risk adjusted performance of 0.0469, and Mean Deviation of 1.06 to double-check if the risk estimate we provide is consistent with the expected return of 0.16%.
Click cells to compare fundamentals   Check Volatility   Backtest Portfolio

American Electric has 92 percent likelihood to decline below $90 in November

Recent Information Ratio is up to -0.03. Price may decline again. American Electric Power has relatively low volatility with skewness of -0.74 and kurtosis of 2.58. However, we advise all investors to independently investigate American Electric Power to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.

Our Final Takeaway

Although many other companies under the utilities?regulated electric industry are still a bit expensive, American Electric may offer a potential longer-term growth to insiders. While some insiders may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to American Electric.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of American Electric Power. Please refer to our Terms of Use for any information regarding our disclosure principles.

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