Correlation Between American States and AES

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

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

Diversification Opportunities for American States and AES

0.04

Correlation Coefficient

American States  AES

Significant diversification

The 3 months correlation between American and AES is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding American States Water and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and American States 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 American States Water 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 American States i.e., American States and AES go up and down completely randomly.

Pair Corralation between American States and AES

Considering the 90-day investment horizon American States Water is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, American States Water is 2.44 times less risky than AES. The stock trades about -0.05 of its potential returns per unit of risk. The The AES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,257  in The AES on August 5, 2025 and sell it today you would earn a total of  130.00  from holding The AES or generate 10.34% return on investment over 90 days.

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

American States Water  vs.  The AES

American States Water

Risk-Adjusted Performance

Weakest

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

AES

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, AES may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with American States and AES

The main advantage of trading using opposite American States and AES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American States 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 American States Water 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.