Correlation Between Ameren Corp and Fortis

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

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

Diversification Opportunities for Ameren Corp and Fortis

0.18

Correlation Coefficient

Ameren Corp  Fortis

Average diversification

The 3 months correlation between Ameren and Fortis is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ameren Corp and Fortis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Inc 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 Fortis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Inc has no effect on the direction of Ameren Corp i.e., Ameren Corp and Fortis go up and down completely randomly.

Pair Corralation between Ameren Corp and Fortis

Considering the 90-day investment horizon Ameren Corp is expected to generate 1.23 times more return on investment than Fortis. However, Ameren Corp is 1.23 times more volatile than Fortis Inc. It trades about 0.14 of its potential returns per unit of risk. Fortis Inc is currently generating about -0.02 per unit of risk. If you would invest  8,308  in Ameren Corp on September 5, 2024 and sell it today you would earn a total of  872.00  from holding Ameren Corp or generate 10.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ameren Corp  vs.  Fortis Inc

Ameren Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ameren Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ameren Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fortis Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fortis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fortis 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 Ameren Corp and Fortis

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

The idea behind Ameren Corp and Fortis Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.