Correlation Between Fortis and AES

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

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

Diversification Opportunities for Fortis and AES

0.61

Correlation Coefficient

Fortis  AES

Poor diversification

The 3 months correlation between Fortis and AES is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fortis Inc and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Fortis 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 Fortis Inc are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Fortis i.e., Fortis and AES go up and down completely randomly.

Pair Corralation between Fortis and AES

Considering the 90-day investment horizon Fortis Inc is expected to generate 0.29 times more return on investment than AES. However, Fortis Inc is 3.49 times less risky than AES. It trades about 0.03 of its potential returns per unit of risk. The AES is currently generating about -0.03 per unit of risk. If you would invest  4,954  in Fortis Inc on July 1, 2025 and sell it today you would earn a total of  13.00  from holding Fortis Inc or generate 0.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fortis Inc  vs.  The AES

Fortis Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fortis is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

AES

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortis and AES

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

The idea behind Fortis Inc and The AES 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.